How to Dissolve an LLC in New York

Anyone who has owned a New York LLC and had to dissolve it, knows it can be a mixed bag of emotions, ranging from despair to exhilaration. 

Whatever your reason for dissolving your LLC, positive or negative, you must take steps to ensure you dissolve it correctly and free yourself from future liabilities or legal complications.

In this post, you’ll learn how to dissolve an LLC in New York, enabling you to move on to new ventures. 

Basics of LLC Dissolution

Dissolution is when you officially dissolve your New York LLC by completing and filing Articles of Dissolution with the New York Department of State. 

The process involves several steps you must complete. Once concluded, the dissolution ends your LLC’s existence as a legal entity once you’ve filed your final tax returns and Articles of Dissolution. Dissolving properly helps protect members from future claims. 

To make sure the Department of State accepts your filing, you must first confirm the reason for dissolution and then follow the procedures relative to the closure. 

Types of LLC Dissolution

Dissolution is usually voluntary or judicial, and an LLC can also end automatically in a few cases. The dissolution procedure you will follow depends on which dissolution type applies to your LLC.

Voluntary dissolution

Voluntary dissolution means the LLC members (or the individual owner of a single LLC) choose to close their business. 

For multi-member LLCs, New York law requires the vote or written consent of at least a majority in interest of the members, unless your operating agreement sets a different percentage. 

Voluntary dissolution usually happens for 2 reasons: 

• Members vote to dissolve the LLC because of financial difficulties or internal disputes.
• A dissolution trigger occurs, such as an event named in your operating agreement, like a set end date. A member’s death or departure doesn’t automatically dissolve a New York LLC; the remaining members can vote (by majority in interest, within 180 days) to dissolve.

Other ways an LLC can end

New York doesn’t administratively dissolve LLCs for a missed biennial statement. The LLC is simply marked past due until it files. An LLC also dissolves automatically if it has no members left and no one continues it within 180 days.

Judicial dissolution

Judicial dissolution happens when a court orders it. A member can ask the New York Supreme Court to dissolve the LLC when it’s no longer reasonably practicable to run the business under its articles of organization or operating agreement, for example because of a deadlock between members.

Dissolving Your LLC in New York

The steps you must follow to dissolve your New York LLC depend on which type of dissolution applies to you.

However, whatever the reason, you must follow the process correctly to ensure your dissolution is approved.  

The following steps (except one) apply to all dissolution types; the first step is only relative to voluntary dissolution.  

Step 1: Vote to dissolve the LLC

LLC members must vote to dissolve their LLC; the majority of the vote depends on the LLC’s operating agreement terms.

Once members have voted in majority as per their operating agreement, they must record their decision in the LLC’s official minutes.  

However, if the LLC doesn’t have an operating agreement, New York’s LLC Law applies: dissolution needs the vote or written consent of a majority in interest of the members. 

Single vs. multi-member LLC dissolution

The key difference between single LLC and multi-member LLC dissolution is members of a multi-member LLC need a majority in interest (or the percentage in their operating agreement) to dissolve the business. 

Dissolution rules in your LLC operating agreement

Your New York operating agreement should include every rule and member’s responsibility for running and dissolving the LLC. 

Before implementing LLC dissolution, always refer to your operating agreement to confirm your reasons for dissolution and comply with the internal terms and conditions. 

Operating agreement rules often include:

• The number (or percentage) of members who must approve dissolution.
• How the LLC will discharge its debts and other liabilities.
• The procedure for settling and closing the LLC’s activities.
• How members will divide assets, cancel contracts, and handle debts.

New York-Specific rules for voting to dissolve your LLC

New York LLCs no longer wanting to continue in business can apply for voluntary dissolution. 

Implementing voluntary dissolution involves these steps:

• Members vote or consent in writing to dissolve.
• The LLC winds up its affairs and notifies creditors.
• Members file final tax returns (no tax clearance is needed for an LLC).
• Members file Articles of Dissolution with the Department of State, and cancel any registrations in other states.

We’ll look closer at those next:

Step 2: Wind up all business affairs and handle any other business matters

In addition to paying any outstanding invoices and tax obligations, LLC members must take specific steps to wind up their LLC’s business affairs correctly.

These steps include: 

• Canceling the LLC’s business licenses and permits.
• Closing any LLC registrations in other states.
• Notifying all customers and suppliers.
• Negotiating the cancellation of any existing contracts or leases.
• Closing all business bank accounts and lines of credit.
• Notifying your registered agent, if you have one.
• Inform all staff members and follow New York employee laws.

Step 3: Settle debts and assets with creditors

To dissolve your New York LLC, you must meet its financial obligations by informing claimants and paying all outstanding debts owed. 

Failure to notify your LLC’s creditors before closing your business can result in legal action, such as your accounts going to a collection agency. 

Multi-member LLC owners must sell all remaining assets and divide any remaining capital (after paying all their bills) as per their LLC operating agreement. 

Step 4: Notify tax agencies and settle remaining taxes

Before dissolving your LLC, you must file and pay all outstanding income, sales, and employment taxes with the appropriate New York state and federal authorities. 

New York state doesn’t require an LLC to apply for tax clearance before dissolution; however, its Department of Taxation and Finance does advise filing the below returns relative to your business:  

• LLCs with employees must file Form NYS-45, its quarterly combined withholding, wage reporting, and unemployment insurance return.
• LLCs registered for sales tax must file a final sales tax return.
• Single-member LLCs must report their final income and expense report on their New York State personal income tax return.
• LLCs treated as partnerships for federal tax must file Form IT-204, Partnership Return.
• LLCs treated as corporations for federal tax purposes must file a New York State corporation franchise tax return.

Step 5: File Articles of Dissolution with the Department of State

Your last step in dissolving your New York LLC is completing and filing your Articles of Dissolution with the New York Department of State within 90 days after the LLC dissolves and begins winding up (LLC Law §705). 

File online through the Department of State’s website, or download the form and mail it with the $60 filing fee to:

New York Department of State, Division of Corporations
One Commerce Plaza
99 Washington Avenue
Albany, NY 12231

Optional expedited handling: $25 (24 hours), $75 (same day) or $150 (2 hours).

Conclusion

And that’s what you must do to dissolve your LLC in New York.

Complete each step in order and then send your articles of dissolution to the New York Department of State.

LLCs with internal disputes, vast debts, or multiple assets should consider speaking with a New York LLC dissolution lawyer.

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