Dissolving a New York LLC can be quite challenging, so it's important to take time to see it through properly.
This post will give you instructions on how to dissolve an LLC in NY state, along with some helpful advice about the process.
This article is for business owners looking for information on how to make their dissolution as smooth and easy as possible.
How to Dissolve an LLC in New York?
There are three ways to dissolve an LLC in NY: voluntarily, judicially, and by proclamation.
Voluntary dissolution is when the members of an LLC decide to end its existence in accordance with the operating agreement.
This can be done for any reason, including but not limited to: disagreements among members, financial problems, lack of business operations, and so on.
Judicial dissolution is necessary when partners cannot settle their business disputes, so they go to court to resolve a deadlock among the members.
Lastly, dissolution by proclamation can occur if a New York LLC does not have any members or it has failed to file an annual report for two consecutive years. The New York State Department will then dissolve the LLC.
Procedure for Voluntary Dissolution
This dissolution process is generally simpler than the other two types.
Step 1: Articles of Dissolution
For a New York limited liability company to voluntarily dissolve, members should follow the rules of dissolution stated in the operating agreement.
All members must agree and sign a written consent form stating so.
Then a document called Articles of Dissolution containing a dissolution form and some basic information about your LLC must be filed with the New York Department of State.
Articles of Dissolution should be sent to this mailing address:
NY State Department of State Division of Corporations, State Records and Uniform Commercial Code
One Commerce Plaza
99 Washington Ave.
Albany, NY 12231-0001
Step 2: Wind Up Your LLC
After the vote, the process commonly called winding up ensues. This includes resolving any lawsuits, paying all outstanding debts and LLC’s liabilities, and distributing LLC assets among its members.
Step 3: Notify Concerned Parties
LLC members should notify creditors, clients, and all third parties of the impending dissolution as soon as the process has begun.
New York LLC might also be required by law to notify their employees and pay remaining wages.
Step 4: Tax Clearance
LLC members should pay taxes, file the final tax return and close all business tax accounts in order to get the written consent of dissolution.
If LLC has incurred tax liability in New York City, obtaining written consent to dissolve from the New York City Commissioner of Finance is necessary as well.
While it is true that no New York City Department requires you to have your tax clearance before dissolving your LLC, the New York Department of Taxation and Finance strongly recommends you file:
- Final business tax returns
- Final form NYS-45, if you have employees
- Final sales tax return, if you sell goods
On your IRS Form 1065, check the "final return" box when you submit your federal tax return.
Step 5: Out-Of-State Registrations
If your LLC is qualified to conduct business in other states, you'll need to submit separate forms in order to terminate your right to do business in those states.
Generally, this process will involve filing a certificate of termination with the appropriate government agency in each state where your LLC is registered to transact business.
Make sure you follow the specific instructions for each state, as they can vary significantly.
You may continue to be liable for annual report fees if you don't submit the extra termination forms.
Out-of-state registrations typically need to be filed with the Secretary of State's office or equivalent.
Once all of these steps are completed, the business is considered dissolved.
You can find the forms, filing fees, and mailing addresses on the official websites of the New York Departments.
How Much Does It Cost to Dissolve an LLC in NY?
The current filing fee to dissolve business entities such as LLC is $60, and if you request expedited processing, there is an additional $25 charge.
Typically, you can dissolve your LLC without involving the New York State Department of Economics under the condition that you've filed all reports and paid any fees owed to them.
If this is not the case, there will be additional filing fees for dissolution.
How Long Does It Take the State to Process the Filing?
The time for the New York Department of State to process the dissolution will depend on how complicated your case is and how many papers you have filled in.
For example, if there is only one owner of the business entity, it may take 90 days to process. However, if there are more owners and articles, the processing might last much longer.
How Long Before Someone Can Take Your Business Name?
Your business name will become available for use after the dissolution process is officially done.
How to Dissolve a Single-Member LLC in NY?
If you are doing it for personal reasons, then just submit the form that terminates the company with the New York Department of State. The LLC will be dissolved thirty days after it's filed.
However, if you are doing this because the LLC cannot operate any longer, then you need to file a certificate of dissolution with the New York State.
How to Dissolve a Foreign LLC in New York?
If your firm was dissolved in your formation state, you must submit a Certificate of Termination of Existence.
Because this document lacks a template, you must create it yourself. However, if your firm continues to operate in its home state, you must submit the Certificate of Surrender of Authority with the New York Department of State.
Dissolving a LLC in NY: Conclusion
Dissolving a New York LLC is not always a straightforward affair.
You must follow the operating agreement and get a majority vote, wind up the company by paying out debts, outstanding taxes, and distributing assets, close out all out-of-state registrations, file Articles of Dissolution, final tax returns, and certificates of termination.
For this process to go down as easily as possible, we recommend seeking out legal advice from a law firm or a reputable business law attorney.
The state's laws are complex, so you need to be sure that the appropriate steps have been taken before your final dissolution date arrives.