What's the same for both?
Start with the reassuring part: most of the process is identical. Whether you're closing an LLC or a corporationthe shape is the same, approve the decision, wind up the business, settle debts, distribute what's left, file a dissolution document with your Secretary of State, pay the state fee, file final tax returns, close the IRS business account behind your EIN, and cancel your registrations. The two-half structure, a state half that ends the entity and a federal/tax half that ends its obligations, applies to both.
So if you understand one, you mostly understand the other. The differences are real but narrow, and they cluster in three specific places.
It's worth being clear about why the differences exist at all, because it makes them easy to remember. They all trace back to how each entity is governed and how it's taxed. A corporation has a formal internal structure, directors and shareholders, so its approval step is more formal. A corporation is a distinct taxpayer that files its own return, so it has Form 966 and a corporate final return. An LLC is a flexible entity whose taxation depends on an election, so its process bends to match. Once you see that the differences are downstream of governance and tax treatment, you don't have to memorize them, you can reason them out.
What's actually different?
Three things separate an LLC dissolution from a corporate one:
- Approval. An LLC uses a member vote under its operating agreement; a corporation needs board approval and shareholder approval.
- Form 966. Corporations (and LLCs taxed as corporations) file it within 30 days of the resolution; ordinary LLCs don't.
- Final returns. A corporation files a final corporate return; an LLC files a partnership return or reports on the owner's personal return.
The rest of this page takes each in turn.
Approval: member vote vs. board and shareholders
An LLC is governed by its operating agreementso the decision to dissolve is a member vote at whatever threshold the agreement sets, majority, supermajority, or unanimous. There's no board, no separate shareholder layer; the members decide and record it.
A corporation has a more formal, two-layer approval built into its structure. Typically the board of directors adopts a resolution recommending dissolution, and then the shareholders vote to approve it. That two-step approval is a corporate hallmark, and its date is what starts the 30-day clock for Form 966. For a single-owner corporation the two layers can be the same person acting in two capacities, but the formality, and the documentation, still matters.
Form 966 applies to corporations, not ordinary LLCs
This is the cleanest dividing line. Form 966Corporate Dissolution or Liquidation, is filed within 30 days of the resolution to dissolve, but only by entities taxed as corporations. A C corporation files it, an S corporation files it, and an LLC that elected corporate taxation files it. A default LLC, a multi-member one taxed as a partnership, or a single-member one that's disregarded, does not file Form 966 at all.
The key insight is that the trigger is tax status, not state entity type. Most LLCs skip Form 966 entirely; a minority that elected corporate taxation don't. If you're unsure which applies to your LLC, that election is the thing to check first.
Final returns differ by entity
The final federal return depends on how the entity was taxed:
- Corporation: a final Form 1120 (C corp) or 1120-S (S corp), marked final.
- Multi-member LLC: a final Form 1065 partnership return with a final K-1 for each member.
- Single-member LLC: no separate entity return by default, the final year is reported on the owner's personal return.
- Corporate-taxed LLC: follows the corporate path, a final corporate return plus Form 966.
Whatever the form, the “final return” marker is what tells the IRS to stop expecting the next year's filing, the same principle covered on the final tax return page for both entity types.
Franchise tax and clearance
Franchise tax works broadly the same for both: where a state charges a franchise or minimum tax, an LLC and a corporation generally both have to be current before the state accepts the dissolution. The amounts and forms can differ by entity type, and some states apply clearance requirements differently, New York, for instance, requires tax-department consent for dissolving corporations that isn't part of the ordinary LLC path. But the principle holds for both: clear the state tax first, or the filing bounces.
The steps both share
Zoom back out and the common ground is most of the job: winding up and settling debts before paying owners, filing the state dissolution, closing the IRS business accountwrapping up final payroll if there were employees, and canceling DBAs, licenses, foreign registrations and the registered agent. If you've read the general closing guideyou already know the spine of both processes, the entity type just changes a few of the vertebrae.
Which one are you closing?
If it's an LLC, start with how to dissolve an LLC; if it's a corporation, how to dissolve a corporation walks the corporate-specific steps. Either way, the parts that trip people up, the approval formality, Form 966, the right final return, and the IRS account, are exactly the parts a specialist handles every day. If you're not certain how your entity is taxed or which steps apply, a specialist is on WhatsApp 24/7 and will tell you straight where your company sits before you file anything.