Founders close companies more often than formation guides admit. The project ended, the market did not work, the structure was wrong. Closing properly costs a few hundred dollars. Walking away costs more.
What happens if you just stop
Stopping payments does not dissolve anything. In sequence:
- The registered agent resigns for non-payment.
- The state annual report goes unfiled; fees and penalties accrue.
- The company loses good standing, then is administratively dissolved — often after a year or more.
- Meanwhile, the federal filing obligation continues. Form 5472 is due for any year with reportable transactions, and $25,000 penalties do not stop because you lost interest.
Administrative dissolution is the state's remedy for its own fees. It is not a clean exit, and it does not close your IRS file.
The closing sequence
- Settle liabilities. Suppliers, contractors, subscriptions, any outstanding tax.
- Close payment processing. Leave the account open long enough for the chargeback window on your last transactions.
- Distribute remaining funds to yourself as a final draw and record it — it is a reportable transaction.
- File articles of dissolution with the state. Usually $0–$100.
- Close the bank account after the state confirms dissolution, not before.
- File the final federal return — Form 5472 with a pro-forma 1120 for the final year, marked as final.
- Cancel the registered agent once the dissolution is recorded.
The order matters. Closing the bank account first leaves you unable to pay the dissolution fee or receive a final refund.
The EIN
An EIN is never reused or reissued to anyone else, and the IRS does not cancel it. What you can do is write to the IRS asking to close the business account associated with it, quoting the company's legal name, EIN and the address on the original application.
Keep your EIN letter after closure. If a question arises about a past year, you will need it.
The final federal filing
The one step people skip, and the expensive one. The year in which you wind up almost certainly contains reportable transactions — the final distribution to yourself, at minimum.
File it, mark it final, and keep the proof. Detail in Form 5472.
Keep the records
Bank statements, filings, contracts, tax returns. Retention expectations run to several years after closure, and the burden of proving what happened sits with you.
A single folder in cloud storage is enough. Doing it at the point of closure is far easier than reconstructing it later.
Consider pausing instead
If you might restart within a year or two, the arithmetic is worth checking. Keeping a dormant New Mexico LLC alive costs the registered agent fee — roughly $50 to $150 a year — plus the federal filing if there were transactions.
Against that, forming again means a new EIN, new banking applications, new processor approvals and a company with no history. If the pause is short, keeping it alive is often cheaper than closing and rebuilding. The figures are in what a US LLC actually costs.