How to Dissolve an LLC in NJ

If you want to learn how to dissolve an LLC in NJ, you will need to be aware of the formal paperwork that needs to be filled out, along with other necessary steps, before no longer conducting business. Most importantly, failure to properly dissolve your business means a continued legal requirement to file annual tax returns, along with other required annual paperwork.

Dissolving Your Business

Before you can dissolve your business, you will need to ensure that your company is in good standing. Assuming it is, you and the other LLC members will still need to come to a vote before dissolving your LLC. If operating a single-member LLC, you can make the choice alone. However, if operating a multi-member LLC, all members will have to agree upon the dissolution, and the members will usually choose one or two members to take responsibility for the dissolution process.

In the State of New Jersey, some steps for dissolution include:

• Satisfying all debts and liabilities of the LLC

• Distributing the remaining assets of the LLC

• Settling all potential legal suits, including civil, criminal, and administrative suits

• Transferring property belonging to the LLC

Before you can distribute any assets to the members, you must ensure that all creditors are paid, to prevent potential legal suits. Thereafter, you can distribute profits on previously made contributions. If there aren’t enough assets to pay back each member, then only a percentage can be paid back to each member, depending on the amount of capital he or she contributed to the LLC. However, if there are sufficient assets to pay back each member and the LLC still has leftover profits, then each member will receive an equal share of the remaining assets.

Once you believe that you have satisfied all of the aforementioned tasks, then you can draft the certificate of dissolution and statement of termination.

Steps for Dissolving Your NJ LLC

First, you’ll need to fill out any annual reporting requirements, even if you are in the process of dissolving your business. While this may seem confusing, you can think of it this way: in order to successfully dissolve your LLC, you need to be in good standing. If, while you are trying to go through the steps of dissolving, you fail to file taxes or submit annual reports, then your company is no longer in good standing, and therefore, you cannot dissolve your LLC.

If you know that your business is in good standing, then you will first obtain a Certificate of Cancellation from the NJ Division of Revenue website. This form, also titled L-109, will include certain business information:

• Company name

• LLC entity number (Employer Identification Number)

• Date in which you initially formed your LLC

• Date in which you want to formally dissolve your LLC (it cannot be a date before, on, or 30 days subsequent to the filing of the cancellation)

• Identify the reason(s) for dissolving your LLC

• Sign the document while also indicating that you have authority to submit the document on behalf of the LLC

You will then submit the document (either online or by mail), along with the required fee, which is generally around $100 for domestic LLCs and $125 for foreign LLCs.

Next, you will need to submit a tax clearance request application. This will only need to be done if your LLC generates revenue. Therefore, if you operate as a non-profit LLC, then you will not be required to fill out this form. Once submitted, you will then obtain a certificate from the NJ Division of Taxation that provides that you no longer have to pay taxes.

When the Dissolution Becomes Effective

The dissolution of your NJ LLC takes effect as soon as the Division of Revenue receives and approves the Articles of Dissolution and the Notice of Tax Clearance that was provided by the NJ Division of Taxation. The business’s tax requirements will also end at this point in time. However, if there are any prior taxes due, you still have to pay prior taxes before you can successfully dissolve the LLC.

If you need help dissolving your NJ LLC, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5-percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with, or on behalf of companies like Google, Menlo Ventures, and Airbnb.