Key Takeaways

  • To dissolve an LLC in New Jersey, you must follow the process under the New Jersey Revised Uniform Limited Liability Company Act (RULLCA), including filing Articles of Dissolution with the Division of Revenue.
  • Dissolution may occur voluntarily by member vote, automatically under certain conditions, or judicially through court order.
  • Before filing for dissolution, LLCs must settle debts, notify creditors, close tax accounts, and file final tax returns.
  • The “reasonably practicable” standard under New Jersey law determines whether an LLC can continue operating when disputes or deadlock occur.
  • Proper documentation—including meeting minutes, tax clearance, and final reports—is essential to avoid liability after dissolution.
  • Business owners can find an attorney on UpCounsel for help navigating complex dissolution issues or disputes among LLC members.

The New Jersey LLC law permits an owner of a business to form a limited liability company (LLC). Any legal issues relating to the LLC are governed by New Jersey state law. 

The laws covering the formation and dissolution of an LLC within the state are enforced by the New Jersey Division of Revenue.

New Jersey Uniform Limited Liability Company Act

Many states have limited liability laws that are similar; New Jersey has certain requirements unique to the state. 

The New Jersey Revised Uniform Limited Liability Company Act (RULLCA) was signed into law on September 19, 2012, by Governor Chris Christie. It is the first major overhaul of the laws of New Jersey that govern limited liability companies. 

The Act became effective on March 18, 2013, and governed all limited liability companies formed after that date. For limited liability companies formed prior to March 18, 2013, the effective date was March 1, 2014.

The Act clarifies the state's acceptance of the Revised Uniform Limited Liability Company Act proposed in 2006 by the National Conference of Commissioners on Uniform State Laws.

The state law for limited liability companies has gone through several amendments to stay current with developing business trends. 

Forming a New Jersey LLC Under the Act

  • The New Jersey Limited Liability Company Act does not allow an LLC to be formed using a name already in use by another business registered in the state. This is allowed only if the organizers of the LLC received written consent from an authorized person of the business.
  • If an LLC name is on the inactive list, it is eligible to be used by another LLC. If the inactive LLC chooses to reinstate their business to active status, the name they initially registered with may no longer be available.
  • When registering a name for the LLC, it must include either "LLC" or "Limited Liability Company."
  • A Certificate of Formation must be filed by at least one person with authority to organize the LLC with the New Jersey Department of Revenue. The LLC is formed once the certificate is filed unless a deferred effective date is indicated.
  • The certificate must include the name of the person or business designated as the registered agent. The agent has the authority to accept legal notices and correspondence from the state. 
  • LLCs are required to file an annual report. Failure to file will result in the limited liability company being placed on the inactive list. The annual report includes the name of the LLC, the date the LLC will dissolve, if applicable, and the name of the LLCs registered agent. 

Limited Liability Operating Agreement

Under the old Act, an operating agreement was not required. If the organizer of an LLC chose to create an agreement, it had to be in writing to make it a valid and enforceable document.

Under the Revised Uniform Limited Liability Company Act, operating agreements are permitted. The agreement can be oral, implied, or a combination.

A limited liability company that chooses not to have a written operating agreement in place may face a more difficult time proving the oral or implied agreement in a court. Although it may be difficult, the oral or implied agreement may trump the provisions of the Act in court. 

Under the new Act, an operating agreement can include an amendment that requires a condition be satisfied or there is approval by a person who is not a party to the operating agreement.

New Jersey LLC Dissolution Process

To legally dissolve an LLC in New Jersey, members must follow both the operating agreement and state requirements under the New Jersey Revised Uniform Limited Liability Company Act (RULLCA). Dissolution may be voluntary, administrative, or judicial, depending on the situation.

1. Voluntary Dissolution

Voluntary dissolution occurs when LLC members agree to terminate the company. Most operating agreements include a clause specifying how dissolution is approved—usually through a majority or unanimous vote. The steps typically include:

  • Member Vote: Approve dissolution in a formal meeting and record it in the minutes.
  • Winding Up: Settle debts, distribute assets, and complete outstanding contracts.
  • Filing with the State: Submit a Certificate of Cancellation (Form L-109) to the New Jersey Division of Revenue and Enterprise Services.
  • Final Tax Returns: File a final New Jersey Business Tax Return and obtain tax clearance from the Division of Taxation before cancellation.

The filing fee is generally $100, and processing can take several business days.

2. Administrative Dissolution

If an LLC fails to file its annual report or pay state taxes, it may be administratively dissolved by the Division of Revenue. To reinstate the company, owners must file for reinstatement, pay overdue fees, and submit all missing reports. If reinstatement is not desired, members should still complete the winding-up process to limit future liabilities.

3. Judicial Dissolution

Under N.J.S.A. 42:2C-48, the Superior Court may dissolve an LLC if it is not reasonably practicable to carry on its business. Common grounds include:

  • Deadlock among members preventing decisions;
  • Failure of the LLC to achieve its stated business purpose; or
  • Misconduct by members or managers damaging the company.

A member may petition the court to dissolve the LLC. If granted, the court will appoint a receiver to handle the winding-up process and distribution of assets.

Steps to Winding Up a New Jersey LLC

Once dissolution is approved, the LLC must complete “winding up” — a legal process of closing the business properly.

  1. Notify Creditors and Claimants: Send written notices to creditors and vendors informing them of the dissolution and provide a mailing address for claims.
  2. Settle Outstanding Debts: Pay any remaining business obligations, including vendor payments, leases, and loans.
  3. File Final Tax Returns: File both federal and New Jersey state returns. For New Jersey, this includes the CBT-100 (C-Corp filing LLCs) or NJ-1065 (partnership filing LLCs).
  4. Distribute Remaining Assets: After all debts are paid, distribute remaining assets to members according to ownership interests.
  5. Cancel Licenses and Permits: End business licenses, registrations, and permits with state or local agencies.
  6. File Certificate of Cancellation: Submit the final Certificate of Cancellation to the Division of Revenue with required signatures and fees.

Failure to properly wind up can expose members to personal liability for unpaid debts or unreported taxes.

Judicial Dissolution and the “Reasonably Practicable” Standard

New Jersey courts may intervene in LLC disputes when it becomes “not reasonably practicable” for the business to continue. This standard focuses on whether the LLC can still fulfill its stated business purpose—not simply whether members disagree.

Common circumstances justifying judicial dissolution include:

  • Persistent member deadlock preventing essential decisions;
  • Loss of the LLC’s business purpose, such as market collapse or regulatory changes;
  • Misconduct or bad faith by controlling members; or
  • Inability to maintain required management structure or quorum for decision-making.

Courts will often attempt to preserve the business through restructuring before ordering dissolution, but in severe cases, dissolution ensures fairness and asset protection.

Tax Clearance Requirement

Before finalizing dissolution, LLCs must obtain Tax Clearance Certificates from the New Jersey Division of Taxation. This certificate confirms all taxes, including sales, payroll, and corporate business taxes, are paid. Without tax clearance, the Division of Revenue will reject your Certificate of Cancellation.

To apply:

  • File all outstanding tax returns.
  • Pay any remaining liabilities.
  • Submit Form A-5088-TC, Application for Tax Clearance.

Processing may take up to six weeks, so plan accordingly before filing final documents.

After Dissolution: Legal and Financial Implications

Even after the LLC is dissolved, former members may face certain post-dissolution responsibilities:

  • Maintaining Records: Retain financial and tax documents for at least seven years.
  • Addressing Late Claims: If a creditor files a claim after dissolution, the LLC may still need to settle it.
  • Reinstatement Options: If the dissolution was administrative, reinstatement may be available by filing all missing annual reports and paying fees.

Frequently Asked Questions

  1. How long does it take to dissolve an LLC in New Jersey?
    The process typically takes 4–6 weeks, depending on how quickly the tax clearance certificate is issued and how promptly required forms are filed.
  2. What is the difference between dissolution and winding up?
    Dissolution marks the official decision to close the LLC, while winding up is the process of settling debts, distributing assets, and filing final reports.
  3. Can one member dissolve a multi-member LLC in New Jersey?
    Usually no—unless the operating agreement or court order allows it. Most dissolutions require a majority or unanimous vote.
  4. What happens if I don’t dissolve my New Jersey LLC properly?
    Failure to file cancellation documents or pay taxes can result in ongoing fees, penalties, and loss of liability protection.
  5. Do I need an attorney to dissolve my LLC?
    While not required, an attorney can help ensure compliance with all legal requirements and protect your personal liability. You can find an experienced business attorney on UpCounsel to assist with the process.

If you need help with the New Jersey LLC law, 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 Google, Menlo Ventures, and Airbnb.