When the time comes to close your business, understanding the process of business dissolution in New York is essential. However, managing this process on your own can be challenging. The experience and knowledge of a skilled professional may help you efficiently handle your dissolution.
A trusted business dissolution attorney may provide valuable support. Schedule a consultation to learn more about our legal services and how we could assist you.
There are several steps to the business dissolution process in New York. It is important to fully complete each step. Transparency and accuracy are vital throughout this process.
Before beginning the dissolution, all owners or the majority of owners must agree. A vote by shareholders of a corporation or members of an LLC may be necessary. Owners will want to refer to the business’ Articles of Organization, Certificate of Incorporation or Bylaws, and New York law for guidance on manners of authorization.
If the company has debts, creditors will need to be notified of the decision to dissolve. Agreements may need to be negotiated if debt obligations cannot be fulfilled. The assistance of a skilled lawyer may prove beneficial to negotiating and managing these obligations and pursuing alternative debt strategies. State law does not impose specific statutory requirements to notify creditors unless the dissolution involves a court-supervised process, but it is standard practice.
Next, the owners will need to obtain consent from the New York Tax Department. To receive consent, the business will need to file a final tax return and mark the appropriate box on the form. Once the New York Tax Department receives all returns and payments it will issue a written consent to dissolve. This step is specific to corporations and is not universally required for other business types. For example, LLCs do not require tax clearance but must file Articles of Dissolution.
After receiving written consent from the New York Tax Department, owners will then need to file a Certificate of Dissolution and pay a fee to the New York Department of State. The Certificate must include the name of the corporation, date of incorporation, officer information, manner of authorization, and election to dissolve. The consent must also accompany the filing.
After the dissolution is finalized, the business’ assets will need to be distributed per the terms of the Articles of Incorporation, shareholder or member agreements, and any other relevant agreements. All accounts should be closed, and licenses and permits canceled.
If the business operates in states other than New York, owners will need to file for dissolution in each state. This means filing final tax returns and Articles of Dissolution in each state. Owners should be certain to follow state-specific rules for the business dissolution.
Seeking legal counsel may be necessary for owners choosing to end operations. An experienced attorney may offer support and guidance throughout the dissolution process.
A business may be voluntarily or involuntarily dissolved. With a voluntary business dissolution, the owners opt to close the business. An involuntary business dissolution occurs when the New York Secretary of State dissolves the business.
Involuntary business dissolution, or dissolution by proclamation, occurs when a business does not file franchise tax returns or pay taxes for two or more years. A business in New York will be dissolved by proclamation unless the owner files for reinstatement or completes the voluntary dissolution process.
The process of business dissolution in New York involves several steps. Depending on the status of your business and the complexity of your operations, dissolution may be lengthy and challenging. Engaging with a practiced lawyer may help you manage this process.
Rodriques Law, PLLC offers comprehensive and dedicated support during your business dissolution. Contact us now to get started.