How to Dissolve an LLC in NY: Everything You Need to Know
If you are considering how to dissolve an LLC in NY, which is the process of officially closing it down, you should know that it is not simple.3 min read
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:
- 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.
- 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 include dealing with any legal disputes, disposing of the LLC’s property, discharging the LLC’s liabilities, and distributing LLC assets to its members.
- 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 to finalize outstanding payments or set up an appropriate settlement schedule. Landlords, insurance carriers, and other third parties should also be notified, if necessary.
- 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.
- 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 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.
- 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.
- 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.
- 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.
- 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.
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