Closing your New Hampshire limited liability company (LLC) will involve a variety of tasks. Among the most important are what is known as dissolving and winding up the business.
Dissolving Your LLC
Your LLC is registered with the State of New Hampshire. Officially ending its existence as a state-registered business entity and, by extension, putting it beyond the reach of creditors, begins with a formal process called “dissolution.” While an LLC may be involuntarily dissolved for administrative reasons (such as failure to pay annual report fees) or through a court decree, here we are concerned with voluntary dissolution by the LLC members.
In order to voluntarily dissolve your LLC, you first should look to your operating agreement. In most cases, it will contain a section with rules for how to dissolve the company. Typically the rules will require a vote of the LLC members on a resolution to dissolve and a requirement that some percentage of members vote in favor of the resolution. Make sure you follow any specific procedural requirements that may be part of the dissolution rules, such as setting a specific time to meet and vote and giving advance notice to all members regarding the meeting. Make sure to record the decision to approve the resolution in the official minutes of the dissolution meeting or on a written consent form.
New Hampshire’s LLC Act provides an alternative method to voluntarily dissolve an LLC: by majority, written vote of the members. The vote must be in writing and specify the effective date of dissolution. (Notwithstanding that the vote is supposed to be in writing, the statute states that if there is no writing, the effective date of dissolution is the date of the vote.) You can use this alternative provision unless you are prohibited from doing so by your operating agreement.
Certificate of Dissolution
After you have voted to dissolve your LLC, but before making any distributions to LLC members as part of the winding up process (see below), you must obtain a certificate of dissolution from the Department of Revenue Administration (DORA). You should be able to use DORA’s Form AU-22 to request the certificate. DORA will issue the certificate only if it determines that your LLC has no returns, tax, interest, or penalties for taxes that are due or unpaid. There is a $30 fee to request the certificate of dissolution.
Be aware that your business name will become available for use by others once your LLC is dissolved.
Following the vote to dissolve your LLC, the company continues to exist for the purpose of taking care of certain final matters that are known as “winding up” the company. You will probably designate one or more LLC members or managers to handle the winding up.
Under New Hampshire’s LLC Act, key winding up tasks may include:
- prosecuting and defending lawsuits
- settling and closing LLC business
- disposing of and transferring LLC property
- discharging LLC liabilities; and
- distributing to LLC members any remaining company assets.
As already noted, you must obtain a certificate of dissolution before making distributions to LLC members. Also, LLC assets must first be used to pay creditors, including LLC members who are creditors, to the extent permitted by law. Then, unless your operating agreement states otherwise, LLC members should receive distributions based on such things as a previous vote to provide a member with an interim distribution or a member having dissociated from the company. Finally, if any assets still remain, and unless your operating agreement states otherwise, members should receive distributions (a) in return for prior contributions to the company; and then (b) based on their respective interests in the company (which typically means their proportional ownership interests).
Notice to Creditors and Other Claimants
One other key task, generally considered part of winding up, is giving notice to creditors and other claimants of your LLC's dissolution. Giving notice is optional. However, doing so will help limit your liability and also allow you to more safely make final distributions to members.
Under New Hampshire law, one way to give notice is by sending a written document directly to known claimants within 60 days of the effective date of dissolution. Proper written notice must:
- state the effective date of the dissolution
- state the deadline, which may not be fewer than 120 days after the date of the written notice, by which the LLC must receive a written claim from the claimant
- describe the information that must be included in the written claim, which must include only information that is reasonable for the LLC to require of the claimant
- provide a mailing address where the written claim shall be sent; and
- state that the claim will be barred if the LLC does not receive the written claim by the deadline stated in the notice.
You may also give notice to unknown claimants by publishing in a newspaper. As with sending direct notice to individual claimants, there are specific rules for giving notice through publication. Generally speaking, claimants have three years after the date of newspaper publication to bring a claim.
There can be certain advantages to giving direct written notice to individual claimants. In any case, if you choose to give claimants notice of your LLC’s dissolution, you should strongly consider getting assistance from a business attorney.
Certificate of Cancellation
After dissolving, winding up, and liquidating your LLC, you may choose to file a certificate of cancellation with the Secretary of State. The certificate should contain:
- the name of your LLC
- the reason for filing the certificate of cancellation; and
- the effective date of the certificate if other than the filing date (not more than 90 days after the filing date).
The certificate must be signed by a manager of the LLC, or, if there is no manager, by an LLC member. A certificate of cancellation form is available from the Secretary of State. Filing a certificate of cancellation is optional. If you have questions about whether to file, consult with a local business lawyer.
For federal tax purposes, make sure to check the “final return” box on your IRS Form 1065 when you file your final federal tax return.
Is your LLC registered or qualified to do business in other states? If so, you must file separate forms to terminate your right to conduct business in those states. Depending on the states involved, the form might be called a termination of registration, certificate of termination of existence, application of withdrawal, or certificate of surrender of right to transact business. Failure to file the additional termination forms means you’ll continue to be liable for annual report fees and minimum business taxes.
For information on dissolving and winding up LLCs formed in other states, check Nolo’s 50-state series on dissolving LLCs.
Note: Dissolving and winding up your LLC is only one piece of the process of closing your business. For further, general guidance on many of the other steps involved, check Nolo’s 20-point checklist for closing a business and the Nolo article on what you need to know about closing a business.