How to Dissolve an LLC in New Jersey? (In 6 Easy Steps)
When a business term is completed or the owners want to engage in other opportunities, dissolving your New Jersey limited liability company may be the best option.
As a seasoned business advisor and legal consultant on the formation, management and organization of limited liability companies, I'll walk you through the process of legally dissolving your New Jersey LLC.
The article is backed with legal information, in-depth research, and personal experience to help you understand the process.
Quick Summary
- To dissolve an LLC in New Jersey, adhere to the operating agreement, notify members and creditors, and comply with state requirements.
- You must hold a member meeting to vote on dissolution, and notify creditors in writing or via newspaper publication.
- Close all business accounts, liquidate assets, and file final tax returns, including a Tax Clearance Request with the New Jersey Revenue and Enterprise Services Division.
- It's important to for the Certificate of Cancellation with the New Jersey Division of Revenue, ensuring all debts are cleared and necessary notices are given.
Steps For Dissolving Your New Jersey LLC
The steps to dissolving your LLC are written in the company's operating agreement or outlined in the New Jersey Limited Liability Company Act.
Step 1: Vote to Dissolve the LLC
It is best to hold a meeting of the LLC members to discuss the proposed dissolution and vote on it. The notice must include the effective date, time, and place of the meeting and a statement that the purpose of the meeting is to vote and dissolve the LLC.
The notice should also be sent by certified mail, return receipt requested, at least 20 days before the meeting is scheduled to take place.
During the meeting LLC members should vote as per the operating agreement that outlines the voting requirements for dissolution.
In the absence of an operating agreement, New Jersey law will apply.
Step 2: Notify Creditors About Your LLC's Dissolution
This can be done by sending a written notice or by publishing a notice in a newspaper in the county where the LLC's principal place of business is located.
The notice must include the date when the dissolution will take effect, the reason for dissolution, and a statement that any objections to the LLC dissolution must be filed within 30 days of receipt of the notice.
Business debts must be paid off before the LLC can be officially dissolved.
If a New Jersey LLC has any unpaid debts, it must continue to operate until all obligations have been satisfied or the creditors approve a plan for their payment.
Step 3: File Final Tax Returns and Obtain Tax Clearance
After all LLC assets have been liquidated, a New Jersey LLC should file a final return for federal and state taxes.
LLC owners must submit a Tax Clearance Request with the New Jersey Revenue and Enterprise Services Division. The prerequisite to obtaining a Tax Clearance Certificate is to have a good standing with the New Jersey Revenue Division.
Provided that your LLC generates revenue, you have to file the final tax returns with the IRS.
Step 4: File Articles or Certificate of Dissolution
A New Jersey LLC can't be officially dissolved until it receives the LLC Certificate of Cancellation [1]. The document can be obtained from the NJ Division of Revenue. The filing fee is $100.
There are a few things you need to include in your Certificate of Cancellation application:
- The name and mailing address of the LLC
- The effective date of the cancellation (must be after the date you filed for dissolution)
- A statement by one or two members confirming the LLC has zero debts or liabilities
- A statement by one or two members saying they have provided notice of dissolution to all creditors, employees, and other interested parties
- The filing date of your New Jersey LLC Articles of Dissolution (must be on file with the New Jersey Division of Revenue)
- The reason for cancellation (voluntary cancellation, failure to pay New Jersey LLC annual reports, etc.).
A business can't just dissolve until the Secretary of State (Department of Revenue) approves the certificate of cancellation.
Step 5: Distribute Assets
In addition to following the operating agreement, the distribution process must comply with state laws. This includes paying off all creditors and settling any outstanding liabilities before distributing the remaining assets to members.
Compliance with these legal requirements is essential to avoid potential lawsuits or legal challenges.
The distribution of assets is often the final step in the dissolution process. It provides closure for members, allowing them to move on from the dissolved LLC with their respective shares, whether in the form of cash, property, or other assets.
Step 6: Close All Accounts and Cancel Licenses and Permits
Close all LLC bank accounts or investment accounts by drafting a letter of instruction and sending it to financial institutions.
The letter should list all account numbers, your business name, and contact information.
Conducting business after you close business accounts can lead to criminal charges. Ensure all final bills and obligations are paid off before dissolving your New Jersey LLC.
Once the bank accounts have been closed, remove the business name from any licenses or permits it holds.
You should also contact the local authorities and cancel any licenses and permits your business.
FAQs
How Much Does It Cost to Dissolve an LLC in New Jersey?
It costs $100 to dissolve an LLC in New Jersey and an additional $25 for expedited service.
What Happens if I Don’t Dissolve My LLC in NJ?
If you don't dissolve your LLC in NJ, you are still required to file annual reports, pay franchise taxes and be personally liable for debts and obligations.
How Long Does It Take to Dissolve an LLC in New Jersey?
It takes 3-10 business days to dissolve an LLC in New Jersey plus an additional 3-6 days mail time. However, over-the-counter submissions can request expedited processing which takes a few hours.
Dissolution of a New Jersey LLC
The dissolution process of a New Jersey LLC entails a procedural approach to stop conducting business in the state. Be sure to consult your operating agreement and follow state requirements.
If you are still unsure how to dissolve an LLC in New Jersey, it is vital to seek professional help. The process can be complicated to navigate without legal assistance.
A professional service provider like IncFile will complete the process on your behalf and ensure the dissolution goes smoothly.
References:
- https://formfiles.justia.com/pdf/new-jersey/0039/41.pdf
