How to Dissolve a Corporation in New York
When dissolving a corporation in New York, you'll need majority approval from all shareholders who are allowed to vote on dissolution.3 min read
When dissolving a corporation in New York, you'll need majority approval from all shareholders who are allowed to vote on dissolution.
New York's Business Corporation Act (BCA)
Under New York's BCA, you can also avoid putting dissolution to a vote if all shareholders who are allowed to vote give their written consent. Check your certificate of incorporation — it may even allow for written consent from a majority or two-thirds majority of shareholders. Written consent may be the easiest way to dissolve your corporation if you have a small business where the majority of shareholders are also directors.
If you do have your shareholders vote to dissolve your corporation, be sure to keep a record of your shareholders' votes as well as the board's resolution. Make sure to review your certificate of incorporation's dissolution provisions and, if necessary, get help from an experienced business attorney. Upon dissolution, inform all shareholders including those who have not given their consent, that the corporation has dissolved.
How to Dissolve a New York Corporation
If your corporation is registered with the State of New York, you'll need to go through a formal dissolution process. A court order or failure to file taxes can also involuntarily dissolve a corporation. To officially complete the dissolution process, you'll have to provide the Department of State with a completed Certificate of Dissolution, which can be mailed, faxed, or delivered in person.
Filing a Certificate of Dissolution
When filing a certificate of dissolution, you'll need to include:
- Your corporation's name — Include the original name if it has changed since your corporation was formed.
- The date the Department of State filed the certificate of incorporation.
- All corporation officers' and directors' names and addresses.
How Long Will It Take to Process My Request?
The Department of State will complete regular processing within seven business days.
- All requests for 24-hour expedited processing can be submitted between 9 a.m. and 4 p.m.
- For same-day processing, deliver or fax documents before 12 p.m.
- There is a two-hour processing service available for documents delivered or faxed by 2:30 p.m.
How Much Does It Cost to File?
The standard filing fee in New York is $60. Additional fees for expedited processing include:
- $25 additional for 24-hour processing
- $75 additional fee for same-day processing
- $150 additional fee for 2-hour processing
The Department of Taxation and Finance will need to clear the dissolution request before the NY Department of State accepts it.
Giving Notice to Claimants and Creditors
Though it is optional to give notice to claimants and creditors, doing so will allow you to more securely finalize distribution among shareholders.
According to the BCA, you can notify creditors and claimants after dissolution by posting a notice in a newspaper once a week for a minimum of two consecutive weeks. This must be a newspaper published in the county where your corporation's office was located when you dissolved your corporation.
It can be tricky to understand quite a few of the rules for giving notice and responding to claims. You should definitely consider assistance from an experienced business attorney.
Out of State Registrations
Your corporation will need to file separate forms if it's registered to conduct business in other states. Check with those states' requirements and file any additional forms to make sure you're not charged minimum business taxes or annual report fees.
After dissolution, your corporation will continue to exist while it wraps up existing contracts and liquidates its assets. This process is called “winding up.”
It's a good idea to assign a director or two to take care of winding up. The winding up process includes:
- Fulfilling contracts
- Collecting and selling assets
- Dividing up assets among shareholders
- Paying liabilities (first paying off taxes and creditors, then dividing assets among shareholders)
Dissolving S Corporations
S corporations are corporations that have elected to have their business income, deductions, losses, and credits pass through shareholders rather than the corporation. They are classified as S corporations by the IRS for federal tax purposes.
To dissolve your S corporation, you will need to:
- Notify the IRS
- File Form 1120S, your corporation's final tax return form
- File Form 966, giving basic information about the corporation
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