Dissolving a Limited Liability Company in New York State - A Checklist

Whether you've been in operation for decades and you're ready to close up shop or your good idea that never picked up steam is ready to meet its untimely demise, all limited liabilities companies in New York State must follow some simple guidelines in order to officially dissolve and close out the business. Shutting down an LLC in New York is known as dissolution. Prior to officially dissolving the business, the owners will engage in the process of "winding up," which involves some of the requirements typically laid out in the LLC's operating agreement, like paying off debts and distributing assets.

Below is a checklist that meets the minimum requirements and covers some basics when it comes to LLCs and dissolution:

Ensure that grounds for dissolution occurred
- You'll want to look to the LLC operating agreement, which, if drafted properly, will include a provision that specifies when the LLC may be dissolved.
- An LLC may dissolve under any of the following circumstances:
  - Expiration of a date set forth in the operating agreement, which specifies the end of the LLC;
  - Occurrence of events specified in the operating agreement as causing dissolution, such as the death of a member;
  - By vote or written consent of a majority in interest of the members, unless the operating agreement provides otherwise;
  - After the departure of the LLC's last member, unless that member agrees in writing to continue the LLC and nominates a replacement within 90 days or otherwise in accordance with the operating agreement; or
  - By judicial decree of the supreme court in the judicial district in which the office of the LLC is located under circumstances described in NY LLC Law § 702

Determine and pay any outstanding debts and liabilities from the LLC's assets
- You cannot just close down the business and avoid creditors, that will most certainly land you in court

Unless otherwise provided in the operating agreement, distribute remaining assets to members first for the return of their initial contributions and then in proportion to each member's interest in LLC distributions
- If there are no assets remaining after paying creditors, members receive nothing, regardless of the amount they initially contributed

If applicable, cancel any registrations in foreign jurisdictions
- If your LLC is operating in multiple states, you'll need to follow the process of cancelling your LLC's registration in those states. This may involve filing paperwork, taxes, etc.

File final tax returns with the IRS and NY State Department of Taxation and Finance
- You'll want to file the return for the period spanning from the beginning of the LLC's tax year through the date of termination
- Consult with your accountant as you may need to file additional returns if you had employees or were required to collect sales tax.
- Dissolving LLCs must also pay any franchise taxes due to the NY Secretary of State before filing Articles of Dissolution. You will not be able to dissolve the LLC until all taxes, fees, interest and penalties are paid

If applicable, file final tax returns in any foreign jurisdictions where your LLC operated

Submit the Articles of Dissolution along with the filing fee to the New York Secretary of State
- Foreign LLCs dissolving or ceasing to do business in New York must submit a Certificate of Termination of Existence as well

If you have any questions on the dissolution process or would like to set up a consultation with one of our business attorneys, please do not hesitate to call us or schedule a consultation using the button at the top of our website.

Disclaimer: This blog post and similar posts are not to be considered as providing legal advice. The discussion here is meant for educational and informational purposes only and shall not create an attorney-client relationship with the readers of this content.