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.
- In New Jersey, small businesses, which constitute 99.6% of all state businesses, according to the U.S. Small Business Administration, emphasize the importance of thorough dissolution processes to prevent legal and financial repercussions.
- Personally, ensuring the correct dissolution of an LLC is crucial to avoid future liabilities and ensure a clean transition to new ventures.
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.
According to the U.S. Small Business Administration, New Jersey is home to over 953,000 small businesses, representing 99.6% of all businesses in the state, which underscores the importance of clear communication and settlement with creditors during dissolution [1].
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 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 [2]. 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 (which 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 (in 2024, as per statistics of U.S. Businesses, small businesses in New Jersey experienced 31,291 openings and 23,968 closings, highlighting the fluid nature of business operations and the critical need for proper dissolution practices [3])
- The filing date of your New Jersey LLC Articles of Dissolution (which must be on file with the New Jersey Division of Revenue)
- The reason for cancellation (voluntary cancellation, failure to pay 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.
"Failing to properly dissolve your New Jersey LLC can lead to significant legal repercussions, such as being personally held responsible for the company's remaining debts and obligations."
-Jon Morgan, Co-Founder & Chief Editor of Venture Smarter
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 for 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 New Jersey?
If you don't dissolve your LLC in New Jersey, 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 of mail time. However, over-the-counter submissions can request expedited processing, which takes a few hours.
References:
- https://advocacy.sba.gov/wp-content/uploads/2021/08/Small-Business-Economic-Profile-NJ.pdf
- https://formfiles.justia.com/pdf/new-jersey/0039/41.pdf
- https://www.census.gov/programs-surveys/susb.html
The $100 filing fee for dissolution seems reasonable, but are there any hidden costs along the way?
A friend of mine dissolved his LLC in New Jersey last year, thinking it would be a straightforward process. He didn’t realize that there were final tax obligations and some lingering fees that came due after he thought everything was wrapped up. When the unexpected tax bill arrived, it was a shock, and he ended up paying more than he anticipated just to settle it. This guide would’ve been a huge help to him, covering all the steps he missed and helping him avoid those costly surprises.