When you’re ready to make a major change, you deserve a fresh start. Unfortunately, people who decide to move on from operating or owning LLCs don’t always know where to begin. Here’s how to ensure that your New York limited liability company shutters its doors properly so that you can pursue other things.
Deciding to Dissolve Your LLC
To dissolve a business enterprise means to terminate it and cease operating as a legal entity. Although someone else could follow in your corporate footsteps, your dissolution marks a definitive endpoint.
Different events can prompt a dissolution. For instance, a court might issue a decree demanding that you terminate. Voluntary dissolution, on the other hand, lets you retain the power to
- Break up as you see fit,
- Apply dissolution rules outlined in your founding operating agreement, and
- Decide how to deal with outstanding property and liabilities.
Want to dissolve of your own free will? Refer to your operating agreement for rules on how to proceed. For instance, you might be responsible for
- Adequately notifying members and owners of an upcoming vote on whether to dissolve,
- Achieving a majority consensus in the absence of specific procedural rules, or
- Thoroughly documenting the decision-making proceedings using a special consent form or meeting minutes.
Once you’ve determined that everyone is onboard with your plans, you’ll need to let the state of New York know. This filing process formalizes your decision in the eyes of the law and the world-at-large.
From the date when you agree to break up, you have 90 days to file your articles of dissolution with the New York Department of State. You’ll need to submit this form with a $60 fee. The paperwork isn’t too complicated, but it will ask you for information such as
- Your LLC’s official name,
- Your LLC’s original name if it’s changed since it was founded,
- A description of the event that prompted you to file for dissolution, and
- The signature of the person filing the documents.
Remember that you’ll need to provide a point of contact for the person filing. Even though this doesn’t have to be an in-state address, it should be a location where you can receive further communication via physical mail.
Dealing With Taxes and Winding Up
Although you don’t have to prove that you’ve settled your tax liabilities before dissolving, doing so is definitely advisable. For instance, filing your state tax returns, NYS-45 quarterly employee withholding forms and sales tax returns can keep the government off of your case. When filing your federal tax form 1065, make sure to indicate that this will be the company’s final return.
Once you’ve decided to dissolve, you need to wind up. This process entails taking care of outstanding business matters that the LLC should handle before being legally allowed to close, such as
- Discharging remaining liabilities,
- Resolving lawsuits,
- Closing business operations and contracts,
- Disposing of property and conveying it to the appropriate parties, and
- Distributing any remaining assets to the LLC’s members.
The order in which you perform these tasks matters. For instance, you can’t distribute assets to your board members before you’ve paid your creditors. You’ll also find it wise to calculate appropriate distribution terms for all members and creditors before actually trying to resolve individual claims.
Finally, remember that these instructions are just for New York. If you were operating in the state as a foreign entity or doing business elsewhere while domiciled locally, then you’d need to file the correct termination of registration, articles of dissolution or other paperwork in those jurisdictions.