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 a 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.
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In order to answer the question posed in the title of this post, it's important to understand the distinction between a sole proprietorship and a limited liability company ("LLC"). The most important distinction is that a sole proprietorship is not actually a corporate entity separate from the owner, like a corporation or LLC. When someone chooses to operate their business as a sole proprietorship, they are simply running their affairs under their personal name and accept unlimited liability (i.e., your personal assets are at risk) as they carry out the nature of their work. Of course, this has inherent risks, but it is by far the cheapest option available for anyone looking to start a business.
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If there's one thing about New York that most people can count on, it's that we like to stand out, be unique, and sometimes add complex layers to simple situations just for the fun of it. You certainly can't be called the "Greatest City in the World" without some added complications. Given New York's reputation, one of the most stubborn law's that just won't go away is the Limited Liability publication requirement. In fact, we are the only State in the entire country that still has this step in the limited liability company formation process.
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Moving out of New York City comes with some immediate perks, like more space, a lawn, a bigger home and lower taxes. So for most people thinking about moving to New Jersey, the benefits most often outweigh the costs and crossing the bridge becomes a simple choice. However, for business owners, there is one extra item that needs to be addressed during your move in order to ensure that you may continue legally operating your business in your new home state.
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In order to discuss this topic, it's important to gain a basic understanding of the legal concept of "piercing the corporate veil." What this means is that in certain circumstances, when properly invoked, a court may "pierce the veil" of a corporate entity and hold the owners personally liable for the obligations of their corporation or LLC. It allows for a corporation's separate legal existence to be disregarded in order to prevent fraud and achieve fairness. This doctrine is often invoked by a third-party seeking to circumvent the limited liability that is afforded to owners and hold them liable for corporate obligations.
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