Key Takeaways

  • Dissolving a business in New York involves formal steps under state law, whether it’s a corporation or an LLC.
  • For corporations, shareholder approval, filing a Certificate of Dissolution, and clearing tax obligations are required.
  • For LLCs, dissolution may occur voluntarily (by member agreement), administratively (for noncompliance), or judicially (through court order).
  • LLCs must file Articles of Dissolution, settle debts, notify creditors, and distribute assets according to their operating agreement.
  • Judicial dissolution of an LLC is only granted under limited circumstances, such as deadlock or when the business can no longer operate effectively.
  • An operating agreement can sometimes restrict members’ rights to seek judicial dissolution in court.

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.

Dissolving a New York LLC Under State Law

While corporations are governed by the Business Corporation Law, New York LLCs follow the Limited Liability Company Law (LLCL). An LLC can be dissolved voluntarily, administratively, or judicially:

  • Voluntary Dissolution – Members vote or give written consent to dissolve, as outlined in the LLC’s operating agreement or state law.
  • Administrative Dissolution – The state may dissolve an LLC if it fails to file biennial statements or pay state fees.
  • Judicial Dissolution – A court may order dissolution if members are deadlocked, the LLC cannot carry out its purpose, or internal conflict prevents management.

Filing Articles of Dissolution with the Department of State is the final step to formally terminate an LLC’s existence.

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.

Required Filings for LLC Dissolution

To dissolve an LLC, the members must file Articles of Dissolution (Form DOS-1366) with the New York Department of State. This form requires:

  • LLC name and date of formation.
  • A statement confirming that all debts, obligations, and liabilities have been paid or otherwise discharged.
  • Confirmation that assets have been distributed among members.
  • Signatures of members or managers authorized to act.

The filing fee is $60, and expedited service is available for an additional fee.

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.

LLC Operating Agreement and Dissolution Procedures

An LLC’s operating agreement is critical in determining how dissolution should proceed. It may set voting thresholds (e.g., majority or unanimous consent) and specify how assets and liabilities must be handled. Courts generally uphold these agreements, even limiting a member’s ability to seek judicial dissolution if the agreement expressly waives that right.

Members should carefully review their operating agreement before initiating dissolution to ensure compliance.

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.

Winding Up

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)

Judicial Dissolution of LLCs

If LLC members cannot agree to dissolve, they may petition the court. Judicial dissolution is not automatic—the court will only grant it under strict conditions, such as:

  • The LLC is no longer able to function in accordance with its purpose.
  • Management is so dysfunctional that the LLC cannot reasonably continue.
  • Financial mismanagement or misconduct threatens the business.

Courts have denied dissolution petitions where the LLC could still carry out its business, even if members were in conflict. Thus, members should present clear evidence of the LLC’s inability to operate effectively before pursuing this route.

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

Frequently Asked Questions

  1. What is the difference between dissolving a corporation and an LLC in New York?
    Corporations file a Certificate of Dissolution and require shareholder approval, while LLCs file Articles of Dissolution and follow their operating agreement or state law.
  2. How much does it cost to dissolve an LLC in NY?
    The filing fee is $60, with optional expedited processing fees ranging from $25 to $150.
  3. Can an LLC in NY be dissolved without unanimous consent?
    Yes, if the operating agreement allows majority approval. If silent, state law may require unanimous consent.
  4. What happens if LLC members cannot agree on dissolution?
    A member may petition for judicial dissolution, but courts only grant it in cases of deadlock, inability to operate, or serious misconduct.
  5. Does notifying creditors apply to LLCs as well as corporations?
    Yes. While not always mandatory, notifying creditors helps finalize dissolution and limits future liability for members.

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