Running an LLC does not always go as planned. You may decide to end operations or you may wish to pursue other business ventures. Whatever the reason, you can dissolve an LLC in New York. However, you must follow a process to dissolve an LLC to avoid legal complications and penalties. Find out how to dissolve an LLC in New York in this article.
Understanding LLC Dissolution in New York
When you no longer want to operate your LLC, closing it down can prevent unnecessary legal and financial complications. Plus, it can help protect you and your assets from future liability.
Dissolution is the formal process of closing a limited liability company (LLC). The process involves wrapping up the financial affairs of the LLC and filing articles of dissolution with the state. The steps to dissolve an LLC need to be followed carefully, so understanding how to dissolve an LLC in New York is essential.
Why Dissolve an LLC in New York?
You may choose to dissolve a New York LLC for various reasons. For example, if business operations fail to perform as you hoped, you may want to move on to other pursuits. As a result, you might dissolve an LLC after selling your company. Sometimes, you dissolve an LLC because the company wants to operate as a different business entity, such as a corporation.
The owners decide whether to close an LLC. A single-member LLC may dissolve upon the retirement or death of the sole owner. An LLC with multiple members may dissolve if they cannot agree on the direction of the business.
How to Dissolve an LLC in New York in 7 Steps
Dissolving an LLC in New York can be complicated. So, following the steps below when dissolving your LLC is critical.
1. Review Your LLC’s Operating Agreement
Reviewing your New York LLC’s operating agreement is the first step you should take to dissolve your company. The agreement will likely contain the steps you must follow to dissolve the LLC. Be aware of the procedural requirements for dissolution as stated in the operating agreement.
2. Vote to Dissolve an LLC
If the operating agreement requires the LLC’s members to vote to dissolve the company, you should organize a meeting to take the vote. Refer to the operating agreement terms for additional factors you must adhere to, such as giving advance notice of the meeting. The agreement may outline the minimum number of members who must vote in favor of dissolution.
New York’s LLC Act offers an alternative method for voluntary dissolution. Unless the terms of the operating agreement state otherwise, New York recognizes dissolution when a majority of the LLC members vote or give written consent.
You should record the decision in the official minutes if the LLC dissolves under its operating agreement or by its members’ majority vote or consent.
3. File Articles of Dissolution
You must prepare and file the articles of dissolution with the New York Secretary of State within 90 days of taking action to dissolve the LLC. You may use the form provided by the New York Department of State (DOS) or draft your own document.
The articles of dissolution include basic information about the LLC, such as:
- The name of the LLC (or the original name of the LLC if changed)
- The filing date of the original Articles of Organization
- How the LLC was dissolved, such as by majority vote or through a specific event noted in the operating agreement.
When completing the articles of dissolution form, the original name and filing date of the articles of organization must match DOS records. A member, manager, or authorized person of the LLC must sign the articles of dissolution.
Once the articles of dissolution are processed, the business name of the LLC will be available for others to use.
4. Notify Tax Agencies and Pay Remaining Taxes
When dissolving an LLC in New York, you should file all necessary income, employment, and sales tax returns with the appropriate tax authorities. While you are not required to get tax clearance before dissolving an LLC, the Department of Taxation and Finances recommends you file the following returns, when applicable:
- Form NYS-45 (Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return) if the LLC pays employees
- Final sales tax return for LLCs that charge sales tax
- Final state income tax returns, based on how the IRS treats the entity for tax purposes.
- If a single-member LLC is treated as a sole proprietorship, you report the final income and expense activity on your New York State personal income tax return.
- An LLC treated like a partnership for federal tax purposes may be required to file a final Form IT-24 – Partnership Return.
- For an LLC treated like a corporation for federal tax purposes, it may be required to file a final New York State corporation franchise tax return.
Tax filings vary based on your LLC’s activity. Consult a tax professional to complete them.
5. Inform Creditors and Settle Existing Debt
Take steps to notify your creditors and settle existing obligations when closing your LLC. Unpaid bills or debts can become problematic after the LLC has closed. Failing to inform creditors and settle outstanding debt could result in accounts going to collection or incurring legal action.
6. Wind Up Other Business Affairs
Beyond paying outstanding bills and tax filing requirements, you should take other vital steps when winding up an LLC’s business affairs. These steps include:
- Cancel all business licenses and permits
- Close any LLC registrations you may have in other states
- Notify customers and suppliers
- Negotiate the cancellation of business contracts and leases
- Close company bank accounts and credit cards
7. Distribute Remaining Assets
Once you have settled all debts, obligations, and tax liabilities, the remaining assets and profits are distributed among the LLC members according to the agreed-upon terms outlined in the operating agreement.
How Much Does It Cost to Dissolve an LLC in New York?
You must submit a $60 filing fee when you send the articles of dissolution to DOS. The DOS accepts cash, checks, or credit cards. You can pay an additional fee ranging from $25 to $150 should you wish to expedite the processing of the articles of dissolution.
Should I Dissolve My LLC Myself or Hire an LLC Dissolution Service in New York?
Closing your LLC can be an extensive process. You can handle the dissolution process of an LLC on your own, but if you miss a deadline or step when closing your LLC’s affairs, it can cost you time and money. You may avoid the stress and hassle of dissolving an LLC by seeking the help of an LLC service in New York.
Use doola to Dissolve Your New York LLC
Depending on how complex your business is, closing your New York LLC can take time and resources. You must follow the necessary steps properly to wind up your business affairs and complete the filing process. A missed step can be stressful and costly.
doola makes it easy to close your LLC. You’ll experience a clean official company closure with the state without loose ends. Go through a simple process of providing relevant information about your business and trust that your dissolution is done correctly with doola.
How long does it take to dissolve an LLC in New York?
After satisfying the dissolution requirements in the operating agreement, you have 90 days to file for dissolution with the New York Department of State.
Can I dissolve my LLC without notifying my members in New York?
The LLC’s operating agreement dictates the requirements for dissolving the company. Most agreements require member notification, as well as taking a vote.
Can I dissolve my LLC if I have pending lawsuits in New York?
You can dissolve your New York LLC at any time. However, you could have personal liability if you dissolve an LLC and distribute assets amid a pending lawsuit.
Can I cancel my EIN once my LLC is dissolved in New York?
You can’t cancel your employer identification number (EIN) with the IRS until you have paid all federal taxes owed and filed all required returns.
What happens if I don’t properly dissolve my LLC in New York?
You should closely follow the steps to dissolve the LLC. You could be stuck with unpaid bills or legal issues if not resolved before the LLC closes and you have distributed the assets.
Can I reopen a dissolved LLC in New York?
You cannot apply for reinstatement in New York if you have voluntarily dissolved your LLC. Instead, you need to start over and form a new LLC.