Key Takeaways

  • Begin with a formal member vote or consent as outlined in your operating agreement.
  • Winding up the LLC includes settling debts, distributing assets, and handling legal obligations.
  • Notify creditors, vendors, and state/federal tax agencies to avoid ongoing liabilities.
  • File final state and federal tax returns; mark them “Final.”
  • Submit Articles of Dissolution to the New York Department of State.
  • Additional steps include closing business accounts, cancelling permits/licenses, and properly terminating foreign registrations.
  • Involuntary dissolution may occur due to noncompliance, but it does not eliminate tax liabilities.

If you are considering how to dissolve an LLC in NY, which is the process of officially closing down your limited liability company in New York, you should know that it is not as simple as locking the doors and walking away. The New York Department of State will not recognize your dissolution until the proper steps have been taken. The proper steps are:

  1. Follow the Rules of Dissolution. These should be stated in your LLC’s operating agreement. If not, follow the state’s laws involving this. A common dissolution method is a majority vote amongst members. Another is obtaining written consent from a majority of members. Either way, the decision should be recorded in the meeting’s official minutes or on a written consent form.
  2. Wind up your LLC. Once a vote is passed, your LLC will exist only to wrap up the company’s business, which is a process called winding up the company. Such winding up tasks includes dealing with any legal disputes, disposing of the LLC’s property, discharging the LLC’s liabilities, and distributing LLC assets to its members.
  3. Notify concerned parties. All notification should occur as soon as possible once the dissolution process has begun. New York LLCs may be required by law to notify their employees and pay any wages or benefits due and do so in a timely manner. You should also notify any lenders, creditors, vendors, suppliers, and other service providers you have business with, thereby finalizing outstanding payments or set up an appropriate settlement schedule. Landlords, insurance carriers, and other third parties should also be notified, if necessary.
  4. Address any claims. After party notification, all claims current or pending against the company should be settled, usually, before any assets can be distributed to owners. Distribution to current and former owners should be based on their withdrawal from the company. This distribution should be proportional to the owner’s stake in the company. If you can make any claims for outstanding receivables, you should do so at this time.
  5. File taxes. All taxes must be filed before dissolution can be completed, even if you reported no revenue, payroll, or sales tax for the year. When filing, make sure you check the box that says “Final” on the return. Once all taxes are filed, you will receive the consent of dissolution from the New York Department of Taxation and Finance (DTF) in about two weeks; longer if franchise tax issues need to be resolved.
  6. Cancel Business Licenses, Permits, and Registrations. Before officially closing your LLC, you must cancel any local, state, or federal licenses, permits, or business registrations associated with your business operations. This may include sales tax permits, health department licenses, professional licenses, or home occupation permits. Contact each issuing agency directly to complete the necessary forms and avoid future penalties or renewal fees. Failing to cancel these documents can result in lingering legal obligations or fees even after dissolution.
  7. Close Business Bank Accounts and Cancel EIN. Once you have paid all debts and distributed remaining assets, you should close the LLC’s business bank accounts. This prevents unauthorized transactions and finalizes the business’s financial standing. Additionally, while the Employer Identification Number (EIN) assigned by the IRS will never be reused or reassigned, you should still notify the IRS in writing that your LLC is no longer in business and the EIN is no longer in use. This prevents future confusion or misuse of your business identity.
  8. File articles of dissolution. These formally inform the Department of State of your dissolution of business in New York. You can consult a lawyer or the New York Department of State website to create these. These articles should include such information as the LCC’s name, date of organization, and the event that caused dissolution (vote, written consent, etc.). The filing fee is $60. Expedited processing is $25 more. Your business name is open for use the date after processing.
  9. Wrap up other tax business. Obtaining tax clearance is not required in New York, but the New York DTF recommends that you file your final business tax returns, final quarterly withholding if you have employees, and final sales tax returns if you sell goods.
  10. Terminate out-of-state registrations. If your LLC is registered to conduct business out of state, separate forms must be filed to terminate that registration for each state. These forms could be called a certificate of termination of existence, a termination of registration, a certificate of surrender of right to transact business or a certificate of termination of existence. If you don’t file these, you will continue to be assessed minimum business taxes and annual report fees.
  11. Notify the IRS and Other Tax Agencies. In addition to state filings, it’s critical to notify the IRS that your LLC is dissolving. Send a letter to the IRS that includes your business name, EIN, and the reason for closure. Also include a copy of your final federal tax return with the "Final Return" box checked. If your LLC had employees, submit your final employment tax returns and deposit any remaining payroll taxes. This ensures compliance and prevents further tax assessments.
  12. If your LLC collected sales tax, ensure that your final New York State sales tax return is filed and the account is closed with the Department of Taxation and Finance. It’s also wise to notify any local tax agencies to which your business reported or paid taxes.
  13. Involuntary dissolution. Your LLC can also be dissolved with no positive action on your part by proclamation of the Secretary of State if you don’t file or pay state taxes for two or more consecutive years. However, this will not get you out of paying your state taxes and fees, and you also may have to pay new taxes in the meanwhile because a proclamation can take several years to finalize.
  14. Reinstating an LLC After Involuntary Dissolution. If your LLC has been dissolved involuntarily—typically for failure to file biennial statements or pay state taxes—you may be able to reinstate it. Reinstatement requires submitting the necessary past-due documents, paying applicable penalties and fees, and filing a Certificate of Reinstatement. This process restores your LLC’s good standing and allows you to resume business operations. However, if your goal is to permanently close the business, it's best to proactively dissolve the LLC rather than waiting for administrative action.
  15. Common Mistakes to Avoid During LLC Dissolution in NY. Avoiding common pitfalls can help ensure a smooth dissolution process. These include:
  • Skipping the vote to dissolve: Even single-member LLCs should document the decision to dissolve.
  • Failing to notify creditors: This can lead to disputes or damage your business reputation.
  • Ignoring tax filings: Dissolution doesn’t remove the obligation to file final tax returns or pay remaining taxes.
  • Overlooking out-of-state registrations: Businesses often forget to terminate foreign registrations, resulting in unnecessary fees.
  • Not maintaining records: Keep copies of all dissolution documents, final returns, and correspondence in case of future audits or legal needs.

Frequently Asked Questions

1. Do I need a lawyer to dissolve an LLC in New York? No, but legal guidance can ensure compliance with all state requirements and prevent costly mistakes, especially if your LLC has multiple members or outstanding obligations.

2. How long does it take to dissolve an LLC in NY? The timeline varies, but after filing Articles of Dissolution and receiving tax clearance (if needed), it typically takes 2–4 weeks for the dissolution to be processed.

3. Can I dissolve an LLC if I have outstanding debts? Yes, but you must settle all liabilities before distributing remaining assets to members. Creditors should be paid first during the winding-up phase.

4. What happens if I don’t dissolve my LLC properly? You may remain liable for annual filing fees, taxes, or penalties. The state may also involuntarily dissolve your LLC, which doesn’t eliminate these obligations.

5. Is publication required to dissolve an LLC in NY? No. While publication is required when forming an LLC in New York, it is not necessary for dissolution.v

By addressing these issues upfront, you protect your interests and reduce the risk of lingering liabilities.

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