Do you own a business in New York and want to close down due to debt or other reasons? If YES, here is a 8-step guide on how to dissolve an LLC in New York. Deciding to close a business in New York can be stressful. While your instinct might be that you just want to be done and walk away, you have to take several steps to officially close your limited liability company and end your LLC status.
Table of Content
- Why Go Through the Stress of Dissolving an LLC?
- How Much Does It Cost to Dissolve an LLC in New York?
- Should You Dissolve an LLC Yourself or Hire a Registered Agent?
- How Long Does the Process Take?
- 1. Follow the Rules of Dissolution
- 2. Wind up your LLC
- 3. Alert all concerned parties
- 4. Address any claims
- 5. File taxes
- 6. File articles of dissolution
- 7. Conclude all other tax business
- 8. Cancel out-of-state registration
Why Go Through the Stress of Dissolving an LLC?
You should know that dissolving an LLC is important because, if you don’t, you can be held liable for the unpaid debts and taxes of the LLC. Most states in the United States levy a fee against LLCs each year, and if you don’t properly dissolve a company, that fee will continue to be charged.
How Much Does It Cost to Dissolve an LLC in New York?
In New York, there is a $60 fee to dissolve an LLC or corporation. Have it mind that for 24-hour expedited processing, there is an additional $25 fee. For same day expedited processing, there is an additional $75 fee. For 2-hour expedited processing, there is an additional $150 fee. (Note: To request expedited processing you must submit a separate, non-refundable fee and note on the envelope “Expedited Processing.”)
Should You Dissolve an LLC Yourself or Hire a Registered Agent?
Your New York registered agent service may be able to help you with the dissolution process. All dissolutions received by mail, fax or in person are processed in seven business days. Requests for 24 hour expedited processing are expected to be submitted between 9 and 4.
How Long Does the Process Take?
In New York, same day processing is available for hand delivered or faxed documents received before noon. Two hour expedited processing is available for documents delivered in person or by fax by 2:30 pm.
Allow at least two weeks to receive your consent from the DTF. The tax department could take longer if you have franchise tax issues that need to be resolved. However, you will receive confirmation of the filing by mail, only if specifically requested, and upon paying the $5 uncertified copy of filed document fee.
Also note that a day after a New York LLC is dissolved; the business name can be used by another New York entity. Also, The New York Department of State has no penalties connected to biennial statements. If you do not file your biennial report, you will receive a written past due notice by mail in 60 days and you will be classified as “Past Due.” You may pay the $9 fee to have your business returned to good standing at any time.
8 Steps on How to Dissolve an LLC in New York
If you choose to dissolve an LLC in NY, the process is not as simple as locking the doors and walking away. The New York Department of State will not recognize your dissolution until the needed steps are taken. These steps are:
1. Follow the Rules of Dissolution
These rules are expected to be stated in your LLC’s operating agreement. If not, follow the state’s laws involving this. However, a common dissolution method is a majority vote amongst members. Another route is by obtaining written consent from a majority of the members. But irrespective of the route you choose, the decision should be recorded in the meeting’s official minutes or on a written consent form.
2. Wind up your LLC
Immediately the vote for dissolution has been passed, your LLC will exist only to wrap up the company’s business, which is a process called winding up the company. Winding up tasks include dealing with any legal disputes, disposing of the LLC’s property, discharging the LLC’s liabilities, and distributing LLC assets to its members.
3. Alert all concerned parties
The state expects all notification to occur as soon as possible and also once the dissolution process has begun. New York LLCs are mandated by law to notify their employees and pay any wages or benefits due and do so in a timely manner.
You are also expected to notify any lenders, creditors, vendors, suppliers, and other service providers you have business with, to finalize outstanding payments or set up an appropriate settlement schedule. Landlords, insurance carriers, and other third parties should also be notified, if necessary.
4. Address any claims
At this point, when all parties must have been notified, all claims current or pending against the company should be settled, usually before any assets can be distributed to owners. This distribution to current and former owners should be based on their withdrawal from the company. This distribution should be proportional to the owner’s stake in the company. If you can make any claims for outstanding receivables, you should do so at this time.
5. File taxes
The state also expects that all taxes must be filed before dissolution can be completed, even if you reported no revenue, payroll, or sales tax for the year. When filing, always ensure you check the box that says “Final” on the return. Once all taxes are filed, you will receive consent of dissolution from the New York Department of Taxation and Finance (DTF) in about two weeks; longer if franchise tax issues need to be resolved.
6. File articles of dissolution
Note that this is to formally inform the Department of State of your dissolution of business in New York. It’s advisable you consult a lawyer or the New York Department of State website to create these. These articles are expected to include such information as the LLC’s name, date of organization, and the event that caused dissolution (vote, written consent, etc.). The filing fee is $60. Expedited processing is $25 more. Your business name is open for use the date after processing.
7. Conclude all other tax business
Acquiring tax clearance is not mandatory in New York, but the New York DTF recommends that you file your final business tax returns, final quarterly withholding if you have employees and final sales tax returns if you sell goods.
8. Cancel out-of-state registration
Have it in mind that if your LLC is registered to conduct business out of state, separate forms are expected to be filed to cancel those registrations for each state. These forms could be called a certificate of termination of existence, a termination of registration, a certificate of surrender of right to transact business, or a certificate of termination of existence. Note that if you fail to file these, you will continue to be assessed minimum business taxes and annual report fees.
To finish closing an LLC in New York, you will want to make sure you have completed each step stated above, so that you and all the other members are fully protected. Ensuring the company is correctly closed will allow you to move on without worries.