How to Close a Company in New York
If your company is registered with NY secretary of state and you wish to discontinue the business, you have to notify the secretary of state of your intentions.3 min read
How to close a company in New York is as follows:
- Submit all required tax returns to New York's Department of Taxation and Finance.
- Pay all due taxes and fees.
- Pay up all business debts.
- Convene a board meeting and document a decision to dissolve the company.
- Convene a meeting of shareholders to approve the decision to dissolve the company.
- Close the IRS tax account of your company.
- Close every business bank account of the company.
- Cancel every local business license and permit.
- Submit the company's articles of dissolution.
Notify the Secretary of State
If your company is registered with New York's secretary of state and you wish to discontinue the business, you have to notify the secretary of state of your intentions. For the record, the secretary of state won't approve of your plans to dissolve your registered company until you've fulfilled all its obligations.
Taxes and Tax Returns
Before you file your articles of dissolution with New York's secretary of state, your company must acquire a tax clearance from New York City's Department of Revenue to prove it doesn't owe any taxes and has filed all tax returns. You must attach a written permission from New York's State Department of Taxation and Finance with your company's articles of dissolution when they are filed with New York City's Department of State.
Attach the permission from New York City's Commissioner of Finance to the articles of dissolution for a company with tax obligations in New York. The moment a company is registered with New York's secretary of state, the company is accountable for repeated due payments to New York's Department of Taxation and Finance and to the secretary of state.
Every creditor of the company should be notified of its impending dissolution. All creditors should be provided with a mailing address that they should send their claims to. They should also be given a deadline.
As much as New York's secretary of state doesn't legally require a company to publish a notice of its dissolution, it's good practice to publish such a notice to inform anyone with a claim. Such a notice can prove useful down the road as evidence of due notification if someone makes a claim after the company has been dissolved.
The minutes of the board meeting convened to decide the dissolution of the company must be recorded and stored. If no board of directors has been set up, it falls on the incorporators to file for the dissolution of the company.
Meeting of Shareholders
If the company has given out shares of stock, a majority of the corporate shareholders have to approve the decision to dissolve it. After the company is dissolved, allocate all remaining assets of the company.
The remaining assets of the company should be divided in accordance with the ownership interests of the shareholders. Every distribution to the shareholders has to be reported to the IRS. It can be in:
- Any combination of both
Closing an IRS Account
The company's IRS account is connected with its federal tax ID, which is also known as the Employer Identification Number (EIN). The moment the IRS connects an EIN to a company, the EIN remains with the company even after the dissolution of the company by the New York secretary of state.
When the last tax return of the company is processed, the IRS automatically makes the company's EIN inactive. However, the account connected with the EIN isn't automatically closed. Therefore, it's good practice to close such an account because the closure of the account will reduce or eliminate the possibility of any problems in the future with the IRS. That way, if you decide to reopen the company down the road, the IRS can readily reactivate the old EIN for your company without complications.
Closing Bank Accounts and Canceling Licenses and Permits
All business bank accounts that were opened for the dissolved company must be closed. If not, there could be running obligations and liabilities associated with it, which could result in lawsuits. Make sure every local business license and permit is canceled to avoid any ongoing financial obligations of the company. This includes reseller permits and business registration licenses.
Filing Articles of Dissolution
The articles of dissolution are the documents you submit to dissolve your company voluntarily. The moment the articles of dissolution have been submitted, processed, and approved, the company legally ceases to exist.
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