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How to Properly Dissolve an LLC

Although a limited liability company (LLC) may serve an important purpose, in some cases, business owners will need to dissolve their LLCs. This legal action involves several different tasks.

When you need assistance in dissolving an LLC, reach out to an accomplished business lawyer. A skilled corporate attorney will walk you through the process of winding up your business so it is done properly. 

Dissolving the Limited Liability Company

New York City limited liability companies must be registered with the state of New York. 

Closing an LLC begins with a process known as “dissolution.” This process terminates the LLC as a state-registered legal entity. This also puts the LLC out of the reach of its creditors.

To intentionally dissolve an LLC, you will need to review the company’s operating agreement. Generally, this document will include instructions for dissolving the business.

It is common for operating agreements to require a vote from the members of the LLC. There may be a certain percentage of the LLC owners who will need to vote in favor of dissolution.

For legal purposes, you should follow the protocol described in the LLC’s operating agreement. In some cases, however, the operating agreement may not specify the actions to take for dissolving the company.

If this is the case, New York’s LLC Act provides instructions for an alternative dissolution method. If a majority of the LLC members vote to dissolve the company, the dissolution can move forward.

Articles of Dissolution

The next step in the process of dissolving an LLC is to file “articles of dissolution” through the New York Department of State. These articles must be filed within 90 days of the decision to dissolve the company.

Articles of dissolution are required to contain the following information about the LLC:

  • The name of your company
  • The original name of the company
  • The filing date of the articles of organization
  • The event that gave rise to the dissolution

Once filed, the articles of dissolution must be signed by an authorized government agent. Submitting the articles of dissolution will also require a filing fee, which is currently $60. 

It may take up to seven business days to process the articles. After the articles are processed, your former LLC’s name will become available for other businesses to use. 

Winding Up the Company

After voting to dissolve the LLC, the company may have final matters to handle. This is known as “winding up” the company.

Even after you have voted to dissolve, the LLC will exist until the members have handled the winding-up process. 

According to New York’s LLC Act, winding up a company involves:

  • Distributing remaining assets from the LLC
  • Discharging all of the company’s liabilities
  • Conveying and disposing of company property
  • Closing and settling the company’s business
  • Resolving criminal, civil, or administrative lawsuits involving the company

It is vital for LLC members to pay any owed taxes while winding up the business. 

Tax Clearances 

The state of New York allows LLC members to dissolve their company before obtaining tax clearance. But the New York Department of Taxation and Finance recommends that LLC members file the following documents during the dissolution process:

  • The company’s final tax returns
  • The company’s final NYS-45 Form–for LLCs with employees
  • The final sales tax return–for LLCs that sell products

It is important to select the “final return” option on the LLC’s IRS Form 1065 for the final federal return. 

Regulations from Other States

If your company is registered to engage in commerce in states other than New York, you will need to file additional forms. The name of the forms will depend on the states in which you do business. 

Common names for these forms include:

  • Termination of registration
  • Application of withdrawal
  • Certificate of surrender of right to transact business
  • Certificate of termination existence

It is important to file these other forms to fully dissolve your LLC.

Contact a Skilled Business Attorney

When you need the best business lawyers in New York, reach out to the accomplished team at Woods Lonergan. Our legal team provides new clients with an initial no-cost, no-obligation legal consultation. Contact us today!