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What happens if your Delaware LLC is cancelled by the state

Two consecutive years of unpaid Delaware franchise tax triggers state-level cancellation. The path to revival, what it costs, and how to avoid it.

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By Zawwad, Tax & Compliance Lead (pending hire, reviewed by founder), DelewarellcPublished May 15, 2026 · Last updated May 15, 2026
Reviewed by Zawwad until this role hire is complete.
What happens if your Delaware LLC is cancelled by the stateTwo consecutive years of unpaid Delaware franchise tax triggers state-level cancellation. The path to revival, what it costs, and how to avoid it.Delaware Secretary of StateDelewarellcWhat happens if your Delaware LLC iscancelled by the stateTwo consecutive years of unpaid Delaware franchise tax…

How cancellation happens

Year 1 of unpaid franchise tax: $200 penalty plus 1.5% monthly interest. The LLC is 'not in good standing' but still legally exists. Year 2 of non-payment: Delaware administratively cancels the LLC. The registered agent can withdraw, and the entity is officially dissolved by the state.

Cancellation is not the same as dissolution. An entity dissolved voluntarily by the members files a Certificate of Cancellation. State-level cancellation is administrative; the members did not choose it.

What stops working when you are cancelled

Bank accounts in the LLC's name become problematic when the bank's next KYC refresh finds the entity has been cancelled. Stripe and other payment processors may freeze accounts. US client contracts may be challenged because the LLC technically no longer exists. Foreign-qualifications in other states may also be affected.

Practically, you cannot enter new contracts in the LLC's name once it is cancelled. Existing contracts may be enforceable, but enforcement gets complicated.

How to recover

File a Certificate of Revival with the Delaware Division of Corporations. The state fee is $200. You also pay all back-owed franchise tax for missed years plus penalties (1.5% monthly compounded). Restoration takes 1-2 weeks once the filing is processed.

Once revived, the LLC's legal existence is treated as continuous (the cancellation is wiped). Bank accounts and contracts can resume. The math: $200 revival + back-owed franchise tax ($300/year × missed years + penalties) = typically $700-$1,500 to restore from a 1-2 year cancellation.

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