Don’t Let Closing in January Cost You a Full Year

If you’re reading this, there’s a good chance you’ve already had the thought.“I think I should shut down my company.”

Maybe it came quietly.
Maybe you’ve been circling it for months.
Maybe you’re not ready to say it out loud yet.

That’s normal.

What’s less obvious is this: the calendar does not wait for emotional readiness. And when it comes to shutting down a company, timing matters more than most founders realize.

One Day Open Can Count As A Full Year

Incorporation states like Delaware and California operate on a simple rule. If your company exists for even one day in a new calendar year, you are typically responsible for that year’s required fees and filings.

That applies even if:

• You made no revenue
• You stopped operating months ago
• You never really “restarted”

If you’re incorporated in Delaware

Delaware LLCs owe an annual franchise tax, regardless of activity. If your company is still legally active on January 1, the tax is due for that year.

Delaware does not prorate the franchise tax. The state looks at whether the entity exists during the year, not how long it was active. You generally keep accruing obligations until you officially dissolve and bring your entity current with the state.

If you’re incorporated in California

California has a similar rule. LLCs are subject to an annual minimum franchise tax, even if the business is inactive or earned no income.

The California Franchise Tax Board explains this clearly.

Many founders are surprised by this one. “Inactive” does not mean “free from obligation” in California.

Most States Still Require Annual LLC Filings, Even if You’re Inactive

Zooming out for a moment.

The majority of U.S. states require an annual or biennial report and fee just to keep an LLC in compliance and in good standing, even if the business has no income or doesn’t operate.

These filings go by different names depending on the state. Annual report. Periodic report. Statement of information. The naming changes, but the principle is consistent.

If the company exists, the state expects paperwork and payment.

The Small Business Administration provides a high-level overview of ongoing state compliance requirements.

Why Do Founders Wait To Close?

Most founders do not delay closure because they are careless.

They wait because:

• The decision feels heavy
• The process feels unclear
• There is always something more urgent

“I’ll deal with it after the holidays” is a very human thought.

The problem is that January does not interpret hesitation kindly. It simply starts a new compliance year.

If you’re on the fence, do this first:

• Confirm your state (DE vs CA) and entity type (LLC vs Corp)
• Check whether you are “in good standing” right now
• Decide whether you want closure before year-end to avoid a new compliance cycle

A new calendar year changes the closing equation

State compliance requirements are typically assessed annually. If a company remains active into January, it may be responsible for that year’s filings and fees, regardless of business activity.

For founders already planning to shut down, closing before year-end can help:

• Avoid an additional compliance cycle
• Reduce total state costs
• Prevent administrative obligations from extending into the new year

This is why many founders choose to resolve closure before January.

Starcycle Can Help You

Starcycle helps founders close their companies with confidence and clarity.

We guide you through the required steps, flag timing risks, and help you finish cleanly. No mystery process. Just clear scope and human support.