The dissolution of an LLC is a process that needs to be followed carefully. If you don’t officially terminate your LLC, there could potentially be tax liabilities, penalties, and legal consequences including lawsuits.
Why Dissolve an LLC
No one wants to deal with business issues that no longer exist. We are sure, you also do not want to be held back by anything related to your LLC, that you do not want to continue.
Therefore, formally dissolving an LLC online is important for the following reasons:
- No More Obligations to Pay LLC Annual Fees and Taxes
- You Will Not be a Defaulter of any State or Fedral Agency
- No Surprises With Lawsuits for Unpaid Debts
How to Dissolve an LLC in New York | Step by Step Guide
We know wrapping things up is more difficult than starting a new venture. Your level of enthusiasm is not the same while terminating your Limited Liability Company (LLC) compared to the energy you once had when you conceptualized an innovative business idea and materialized in the form of your LLC.
But, some things in life are inevitable. Even terminating your LLC is your voluntary decision, it still feels heavier to carry out the last few duties. Well, we can relate to your feeling.
This is why, in this LLC dissolution guide, we tried to make things simpler and easy for you in 5 simple steps.
- Decide to Dissolve your LLC
- Get an Expert Advice
- Resolve Your Financial Obligation
- File New York Article od Dissolution
- Some Important Closings Related to New York LLC
Keep on reading to learn the whole process of LLC termination in simple and concise steps.
Decide to Dissolve your LLC
If your LLC dissolution is voluntary, the LLC owners must make the decision to dissolve their LLC according to the guidelines drafted in the LLC articles of organization.
Remember to document the final decision with a written agreement. To do so:
- Hold a meeting of LLC members
- Take a vote with LLC members to terminate the LLC
- Determining the formal date of dissolution
- Through the LLC’s meeting minutes, record the LLC dissolution vote
Follow Your LLC Operating Agreement
An LLC operating agreement is the document that contains the information from an LLC’s day-to-day operation to the termination of an LLC. Most New York LLCs outline all the steps for LLC dissolution. While terminating your LLC, follow the guidelines stated in your New York LLC operating agreement.
In case you had not defined the LLC dissolution process in your New York LLC operating agreement, you must consult the New York Secretary of state for further instructions.
Get an Expert Advice
Terminating an LLC is a delicate and multi-step process. It is highly recommended that you seek professional help. Depending on your LLC’s personalized needs, expert advice may come from accountants, bankers, lawyers, the IRS, business brokers, tax experts, auctioneers, etc.
If you have been running your business in a compliant manner, you may not need all the professionals to dissolve your LLC. Hiring any of the famous LLC services online will suffice you.
LLC services such as IncFile or LegalZoom take care of everything related to closing your business. You can pick a package satisfying your LLC needs, and there you go.
Resolve financial obligations
Although the state of New York does not require you to obtain tax clearance before dissolving your LLC, it is important to resolve any outstanding tax and other financial obligations before filing the Certificate of Dissolution with your state.
Failure to resolve these issues will result in penalties and interest assessed by state and federal tax agencies. If your LLC owes back taxes to the IRS or any other state agency, you will receive a Notice of Federal Tax Lien or a Notice of State Tax Lien.
Once the IRS places a tax lien on your LLC’s property, it can be very difficult to get the tax lien released. To avoid all such stress and headache, you should resolve all the financial obligations on your New York LLC. Some common New York LLC financial obligations are listed below:
New York LLC Taxes
While filing income tax returns, check the box that indicates the document is a final return. Many state revenue agencies in New York require additional filings for sales tax.
If your LLC has employees, you may risk personal liability if you fail to obligate your payroll tax responsibilities. Inform your New York state and federal tax agencies that your business is closing. Moreover, notify them that you will cease to file an employer’s quarterly tax form and unemployment returns.
Business Debts
Notify all creditors and lenders of your LLC of your dissolution and settle the remaining debt. Moreover, contact the business associates who owe payment to you or to whom you owe a payment.
In case you can not pay your debts, you should consider filing for bankruptcy. It’s recommended to discuss with your attorney, accountant, and insurers to ensure that everything is accounted for.
File New York Articles of Dissolution
New York Articles of Dissolution are the legal documents that you file with the New York Department of State, Division of Corporations to dissolve your LLC voluntarily.
Important Note: The New York LLC name and date of filing of the articles of organization in the Articles of Dissolution form should be the same. Otherwise, the articles of dissolution form will not be processed if it does not match the official on record sign for the entity.
Once the LLC Articles of Dissolution have been filed and processed by the concerned authority, your LLC will be officially dissolved and no longer legally exist.
Dissolve a Domestic LLC in New York
You can file the New York Domestic LLC Articles of Dissolution with the New York Department of State, Division of Corporations by downloading the form.
Complete the Articles of Dissolution form, sign the document, and send it to the New York Department of State, Division of Corporations at the address given below:
Mailing Address:
New York Department of State, Division of Corporations
Uniform Commercial Code
One Commerce Plaza
99 Washington Ave.
Albany, NY 12231-0001
Cost of Domestic LLC DissolutionIn New York
New York Domestic LLC Articles of Dissolution Fee is $60. This fee is payable to the Department of State, Division of Corporations and can be paid through credit card, check, or money order.
For credit card or debit card payments, complete and sign the Credit Card/Debit Card Authorization Form
Dissolve a Foreign LLC in New York
File the New York Foreign LLC certificate of cancelation with the New York Department of State, Division of Corporations online or by downloading the form given below:
Complete the certificate of cancelation, sign the document, and send it to the New York Department of State, Division of Corporations at the address given below:
Mailing Address:
New York Department of State, Division of Corporations
Uniform Commercial Code
One Commerce Plaza
99 Washington Ave.
Albany, NY 12231-0001
Cost of Foreign LLC DissolutionIn New York
New York Foreign LLC Application of Cancellation Fee is $60. This fee is payable to the Department of State, Division of Corporations and can be paid through credit card, check, or money order.
For credit card or debit card payments, complete and sign the Credit Card/Debit Card Authorization Form
Step 5: Some Important Closings Related to New York LLC
Close your EIN
LLCs are required to contact the IRS (Internal Revenue Service) to close their Employer Identification Number (EIN) account. The IRS cannot cancel your EIN account, but you notify the agency that you no longer plan to use that EIN in the future by closing your EIN account.
When closing a business as an LLC, the IRS provides a checklist of typical tax actions to take. Make sure you fulfill all the requirements.
Close Your Business and Tax Accounts
While operating as New York LLC, you would have various tax accounts maintained by different departments within the state of New York. Some of the common taxes that an LLC may owe are:
- Sales & Use Tax
- Employee Withholding Tax
- Unemployment Insurance Tax
- State Income Tax
- Local Taxes
Simply filing a final return to the concerned tax agency usually means closing your tax accounts. However, you may need other official paperwork to close some accounts. Contact the concerned tax agency to close your tax account.
It is also important to close your business bank account and cancel your credit cards to avoid any financial or legal trouble in the future.
Cancel Licenses, Permits, Professional Registrations, and Business Names
After terminating your New York LLC, it is crucial to cancel all licenses and permits that you will no longer need. Doing this will protect your reputation and finances.
Trade name, Assumed Name, or Doing Business As (DBA) is a business name other than your own name that you registered with the state or local government for rebranding, branching out into new services, products, or brands, or franchising purposes, etc.
If you have registered a New York assumed name, you must cancel that business name registration with your local government.
Winding Up | Things to Do After Dissolving your New York LLC
After the dissolution, your LLC continues to exist to take care of certain final matters. These matters are known as “winding up” the business. To handle winding up your LLC, you are required to designate one or more LLC members or LLC managers.
New York’s LLC Act outlines the following key winding up tasks:
- As a going concern for a reasonable time, preserving the LLC’s business or property
- Prosecuting and defending all civil, criminal, or administrative proceedings and actions
- Discharging LLC liabilities
- Settling all LLC disputes by arbitration or mediation
- Transferring and disposing of LLC property
- Paying off debts to creditors and lenders
- Distribution of the remaining LLC assets among LLC members.
Involuntary New York LLC Dissolutions
The state of New York can cause an LLC LLC to be involuntarily dissolved. There are several reasons for involuntary LLC dissolution and mostly revolve around significant mistakes made by LLC members. Some of the reasons are:
- If LLC is fraudulently formed in the first place
- LLC did not appoint a registered agent let the registered agent lapse
- If LLC failed to file the proper forms to change the registered agent
- If LLC abused the privilege to operate a business in New York
- If LLC did not pay taxes, annual reports
- If LLC fails to operate in New York state-compliant manner
It is advisable not to operate your LLC in a manner leading to the state dissolving it against your will. The penalties and legal consequences are steeper than you might imagine.
For instance, your LLC cannot operate in New York ever again after the involuntary dissolution. You would need to create an LLC again from the start, which would cost you time, money, and mental peace.
If you continue to operate a non-compliant LLC in New York, you could open yourself up to all sorts of legal issues. Therefore, when it comes to following the state rules and regulations, be mindful and stay compliant.
FAQs on How to Dissolve an LLC in New York
How do I dissolve my LLC in New York?
To dissolve your LLC in New York, you are required to file signed Articles of dissolution form with the New York Department of State, Division of Corporation. Meanwhile, you can proceed with the winding-up process of your LLC.
How do I close a business in New York?
To dissolve a business in New York you need to follow the following steps:
- Hold a meeting of business owners and record a resolution to Dissolve the New York business.
- Resolve all the finacial obligations
- File cancelation certificates with the state
- Clear up any business debts
- Distribute the remaining assets among business owners
- Close all business bank accounts
- Cancell all the business licences and certificates that you no longer wish to use
How long does it take to dissolve a business in New York?
Processing of articles of dissolution usually takes approximately 5-7 business days. The New York LLC name and date of filing of the articles of organization in the Articles of Dissolution form should be the same. Otherwise, the articles of dissolution form will not be processed if it does not match the official on record sign for the entity.
Is it hard to dissolve an LLC?
Dissolving a business seems hard at the start. However, this is the best practice to avoid future penalties, liabilities, and lawsuits which are harder to deal with. How to dissolve an LLC guide made the LLC dissolution simple and straightforward. Follow the guide and shut the doors of lawsuits or penalties forever.
Why would you dissolve an LLC?
No one wants to deal with business issues that no longer exist. Therefore, formally dissolving an LLC is important for the following reasons:
- No More Obligations to Pay LLC Annual Fees and Taxes
- You Will Not be a Defaulter of any State or Fedral Agency
- No Surprises With Lawsuits for Unpaid Debts
What is the difference between dissolution and termination?
The terms LLC termination and LLC dissolution are often used interchangeably but have distinct legal meanings. When an entity ceases to legally exist, it is called termination of the entity. On the other hand, dissolution is the winding up of the affairs of the entity before the termination of the entity.
How much does it cost to dissolve an LLC?
New York Foreign LLC Certificate of cancelation Fee or domestic LLC Articles of Dissolution fee is $60. This fee is payable to the Department of State, Division of Corporation, and can be paid through credit card, check, or money order.
Aisha Noreen is an owner of a small business with more than 9 years of experience in the marketing industry. With the wisdom of an old soul, she always seeks innovation and mind-blowing ROI techniques. Her unique approach helped many small businesses thrive and she can surprise you in many ways as well. Believe it or not, her energy, passion, and creativity are contagious enough to transform your business and take it to another level.