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This is intended for early stage companies — pre-seed or seed-stage. Some Series A companies may also be able to use it, but most Series A & later stage companies will have significantly more complexity, and this should be advised upon by your legal counsel (and / or navigated by your exec team). However, we hope this is still useful as a sanity check during a tough time.If your business activity is concluded in time for you to dissolve before Dec 31st, it’s highly advisable to do so. Otherwise, you’ll trigger an entire additional year of tax and regulatory filings in most cases.
(ask your CPA but typically $2-4K for a single year, e.g., if you’ve already paid for the prior year’s taxes; or $3-10K if you have 2 years’ returns to file) ($2-10K) & & (varies, but ~$500-1,000 for each year). (varies; typically $100-300 per state) (this can vary from $0 to thousands of dollars depending on how many state returns you need to file — CPA to advise)
Epilogue: Dissolving a Company
Things to know before you start
→ You can still continue the rest of the logistics of a wind-down process for several months more; you’ll just need to complete the formal steps of (i) a board resolution and (ii) filing for dissolution with Delaware — before the end of the year.
Note: AbstractOps, where this guide was developed, can help with the state account closure aspect of this; this often has a lead-time, so please contact us at if we can help. We’d be happy to offer a significant discount for just account closure / wind-down to help during the difficult process of closing down.
Do you have feedback or suggestions for how to improve this guide? Please , we’d love to make it better.
Dissolution Checklist
Phase
Task
Type
Notes
Phase 1: Prep
6
Notify employees
People
Inform them of a) Plans to dissolve, b) Severance if any, c) Liquidating distributions if any to common stockholders, d) Last day of insurance coverage, e) Job search support you plan to offer.
Notify investors
Governance
Company’s CEO should notify stockholders & noteholders of the context, and let them know if there will be dissolution proceeds. Check cap table and wherever the company maintains its investor list.
Calculate first draft of liquidating distributions
Finance
Make sure to set aside reserves for
@Pay all other outstanding vendor obligations
@Pay all other outstanding contractor obligations
@Pay final accounting + bookkeeping bill (or reserve $ for this bill)
@Pay final legal bill
@Run final payroll to employees
@Make severance payment to employees (if applicable)
@Prior year DE Franchise tax
@Pay final year DE franchise tax
@Surrender registrations in states where registered
@File final tax return (federal + state)
Notify lawyer
Vendor
While you can complete many of these steps yourself, it’s highly advisable to at least loop in your lawyers to work with you during this process to make sure you aren’t missing critical steps for your specific needs, and that you’re following good hygiene and best practices.
In particular, it would make sense to ask them about the following to kick off the process (most should be boilerplate documents but they can tailor it to your needs and context as needed):
@Board Resolution to dissolve the company
@Stockholder Consent to dissolve the company
@Sign SAFE-holder / Noteholder dissolutions
If you need to save on legal fees, you can typically handle the regulatory steps in and . If you need additional assistance, feel free to ; handling state compliance will be far cheaper with us than with having your lawyers do it, since it’s compliance work not legal.
@File dissolution with DE
@Surrender registrations in states where registered
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