If you think that it is time for you to shut down your limited liability company (LLC) in New York, you have to understand the various tasks you need to accomplish. Closing a business requires you to officially dissolve it. This way, you will prevent any legal issues and penalties.
Dissolve An LLC
When you formed your LLC, you registered it with the state, so you should also end its existence officially. Not only will doing so remove its status as a state-registered company, but it will also put it beyond the reach of creditors.
The dissolution process varies from state to state. The requirements and fees may differ depending on state regulations. In New York, it involves the following steps:
- Step 1: Check your LLC’s operating agreement. In most cases, the operating agreement of the LLC has a provision detailing the rules you have to follow. It usually covers the required percentage of votes to approve the resolution to dissolve the company. Make sure you follow all procedural requirements stated in your operating agreement, such as how you will set the specific time for the resolution meeting and how you will give advance notice informing the members about the schedule.
If your operating agreement does not have any section on dissolution, you have to follow the LLC Act of New York. You will need the vote or written consent of at least a majority of the members. Whether you close your LLC based on your operating agreement, a majority vote, or a majority written consent, you have to make sure that you put the decision on the official minutes of the meeting or record it on a written consent form.
- Step 2: Close your LLC’s tax accounts and obtain a tax clearance. Doing business in New York may require you to maintain various tax accounts. Make sure that you pay off all the taxes and fines your company owes.
While the state does not require LLCs to obtain a tax clearance before dissolution, it will be best to file certain forms with the Department of Taxation and Finance. Doing this will inform them that your company will no longer have tax obligations.
Here are some of the documents you may have to file:
- Final Tax Return
- Final Quarterly Withholding Form if you have employees
- Final Sales Tax Return if you sell goods
As for your federal taxes, you only need to check the Final Return item on your Internal Revenue Service (IRS) Form 1065. Doing this will inform the agency that your company will no longer be operating and that it is your final federal tax return.
- Step 3: File the necessary paperwork. To formally dissolve an LLC, you have to submit the appropriate form and pay the corresponding fee. File a completed Articles of Dissolution with the Department of State along with the $60 filing fee.
To fill out the Articles of Dissolution, you will have to disclose information about your LLC. These include the following:
- Your company name
- If you have changed the company name, the original name of your LLC indicated in your Articles of Organization
- The date when you filed your Articles of Organization
- The event that led to the filing of the Articles of Dissolution such as a majority vote, written consent, or another event stated in your operating agreement
- Signature of an authorized representative
You can pay by cash, money order, check, Mastercard, American Express, or Visa. But if you submit the documents by mail, pay via check. Make sure it is made payable to the Department of State. If you submit by fax, you will have to attach a Credit Card/Debit Card Authorization Form.
If you request expedited service, you will have to pay an additional fee. You also need to write “Expedited Processing” on the envelope containing your documents. The payment for expedited service is separate. You will have to include an additional money order or check. If you pay by credit or debit card, you have to indicate the level of service requested in the authorization form.
The Department of State normally takes seven business days to process mailed, faxed, and in-person submissions. If you submit between 9 AM and 4 PM, you can request 24-hour expedited processing. This costs an additional $25. Hand-delivered and faxed documents can be processed on the same day for an additional $75. If you submit by fax or personally by 2:30 PM, you can request a 2-hour expedited service for an additional $150.
- Step 4: Complete the winding-up process. Even after the LLC members vote to dissolve an LLC, the business entity still exists. Use this time to take care of the winding up of your company. You can appoint a member, manager, or team to handle the tasks.
According to the LLC Act of New York, your company will have to accomplish the following:
- Prosecute or defend any civil, criminal, or administrative lawsuits
- Settle and close the company’s business
- Dispose of and convey the properties of your LLC
- Discharge liabilities
- Distribute the remaining assets to the members
The law requires you to follow a particular order when discharging liabilities and distributing assets. Keep the following tasks in mind:
1. Pay or establish adequate reserves to pay your company’s creditors. Include any member who happens to be a creditor.
2. Distribute assets to former and current members unless your operating agreement says otherwise.
3. Return the contributions of the members that you have not yet returned if there are any remaining assets unless your operating agreement provides otherwise.
4. Make distributions to LLC members according to their respective membership interests.
If you think you need help in completing the dissolution process in New York, contact a reliable third-party organization like DoMyLLC. Our team of experts will handle the preparation and filing of your paperwork. You can also request a personalized solution to make sure that the service you will be getting is suitable for the circumstances and needs of your LLC.
Business Filing Section