How to Dissolve an LLC in New York

When closing your business, you must take the appropriate steps to legally end your company. These steps include ending your LLC's registration with the state, paying off your company's debts, and canceling your licenses and accounts.

New York requires limited liability companies (LLCs) to follow a specific procedure to dissolve the business. This procedure is known as "dissolving" and "winding up" your New York LLC. You can find key elements of the dissolution procedure in New York's LLC laws: N.Y. Ltd. Liab. Co. Law §§ 701 and following (2024).

For general step-by-step guidance and frequently asked questions, check out our article on the steps to dissolving an LLC.

Dissolving and Winding Up Your LLC in New York

Your LLC is registered with the State of New York. If you want to end its legal existence and limit your liability to the state and creditors, you must follow a formal process called "dissolution." While a court can order an LLC to be involuntarily dissolved, here we are concerned with the LLC owners (called "members") voluntarily dissolving the LLC.

"Dissolving your business" refers to the LLC members voting to end the LLC and filing the required paperwork with the New York Department of State (DOS). Once you've filed the dissolution paperwork, your LLC continues to exist for the purpose of taking care of its final matters and affairs that, collectively, are known as "winding up" the company. You'll probably designate one or more LLC members or managers to handle the winding up of your business.

Under New York's LLC laws, key winding-up tasks include:

• prosecuting and defending civil, criminal, and administrative lawsuits
• settling and closing the LLC's business
• disposing of and conveying the LLC property
• discharging the LLC's liabilities; and
• distributing any remaining assets to LLC members.

(N.Y. Ltd. Liab. Co. Law § 703 (2024).)

In winding up your business, you'll likely need to settle business debts, liquidate business assets, and end your licenses, permits, registrations, and accounts

These tasks are natural and important steps in closing your business. Avoiding any of them can put you and your business at risk—financially and legally.

Review Your LLC Articles of Organization and Operating Agreement

To voluntarily dissolve your LLC, you first should look at the company's formational documents:

• the articles of organization, and
• the operating agreement.

Usually, one of those two documents will contain a section with rules for how to dissolve the company. Oftentimes, you'll need the LLC members to vote on a resolution to dissolve the LLC. More specifically, you'll need a certain percentage of the members to vote in favor of dissolution for the resolution to pass. For example, your operating agreement might require two-thirds of the LLC members to vote to approve the dissolution for the vote to pass.

Make sure you follow any specific procedural requirements that might 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.

New York's LLC laws. If your formation documents don't specify when and how the LLC can be dissolved, you'll need to apply New York's default rules for LLCs. Under New York law, you can dissolve your LLC by a vote or written consent of at least a majority in interest of the members. (N.Y. Ltd. Liab. Co. Law § 701 (2024).)

A "majority in interest" means the majority of the interest in an LLC, not necessarily a majority of the members. For example, suppose an LLC has three members. Member A has a 60% interest in the LLC, Member B has a 30% interest, and Member C has the remaining 10% interest. In New York—a majority in interest state—Members B and C couldn't together vote to dissolve the LLC because their combined interests, 40%, aren't more than 50% (a majority). However, Member A alone could vote to dissolve the LLC because they hold a majority interest in the LLC.

You should note that dissolving your LLC, alone, doesn't stop legal actions or proceedings your LLC is involved in. However, formally canceling your LLC's registration does generally limit your liabilities with the state.

File Articles of Dissolution With the DOS

You must file Articles of Dissolution with the DOS within 90 days of the LLC's official decision to dissolve and the start of winding up the LLC. You must provide the following information in your articles:

• the name of the LLC (as listed in the LLC's articles of organization)
• the date the articles of organization were filed, and
• the event that caused the LLC's dissolution (such as a vote or written consent of a majority interest of members, or an event specified in the operating agreement).

(N.Y. Ltd. Liab. Co. Law § 705 (2024).)

An LLC member, manager, or authorized person must sign the articles and provide their name and mailing address. As of 2024, the fee to file articles of dissolution in New York is $60.

The DOS provides a dissolution form that you can use as your articles. However, you're not required to use the form. You can create your own form or use a form from a legal supply store as long as the required information is present.

Once you complete the dissolution form, mail your articles of dissolution, along with the required fee, to the DOS.

When you file the articles of dissolution, your LLC's articles of organization will officially be canceled, ending your LLC's registration with the state. Be aware that once your registration is canceled, your business name will become available to anyone to use.

Settle Debts and Distribute Company Assets

Now that you've notified creditors of your LLC's dissolution, you should have a general idea of the debts your LLC is responsible for. If you have any company assets to liquidate, you should liquidate them now so that you have all available funds from your LLC to distribute.

New York law requires you to distribute your LLC's assets in a particular order:

1. first, to creditors, including LLC members who are creditors (and including any taxes owed by the LLC)
2. second, unless the operating agreement says otherwise, to members and former members for distributions owed (for example, distributions based on a member's withdrawal from the LLC)
3. third, to members for the return of their contributions, and
4. fourth, to members in the proportions that the members share in distributions.

(N.Y. Ltd. Liab. Co. Law § 704 (2024).)

For example, suppose that Marshmallow Man LLC is a New York LLC with three members: Winston, Ray, and Egon. Under the LLC's operating agreement, Winston is entitled to a 40% share of the LLC's distributions, and Ray and Egon are each entitled to 30% of the LLC's distributions. All members vote to dissolve the business. After liquidating the LLC's assets, the company has $100,000 to distribute.

First, the LLC must pay off its creditors. So, the business pays the remaining $10,000 on a car loan and $5,000 in taxes, leaving $85,000. The operating agreement is silent on interim distributions and distributions for withdrawing members. Therefore, no distributions need to be made to the current or former LLC members. Second, the company must pay Egon back for the $25,000 he contributed to the business when it first started out. Third, the LLC can distribute the remaining $60,000 to the members in the proportion in which they share in distributions. Winston is entitled to 40% of the distributions so he'll receive $24,000. Ray and Egon are each entitled to 30% of distributions so they'll each receive $18,000.

Cancel Out-of-State Registrations and Other Licenses and Permits

If your LLC is registered or qualified to do business in another state, you must take the appropriate steps to end its registration. Typically, you must file a specific form to terminate your right to conduct business in those states. Depending on the states involved, the form might be a:

• termination of registration
• certificate of termination of existence
• application of withdrawal, or
• certificate of surrender of right to transact business.

If you don't file the additional termination forms, you'll continue to be liable for annual (or biennial) report fees and minimum business taxes.

New York doesn't issue a general business license. But depending on your location, profession, and business activities, you might be required to have various licenses and permits. You should cancel any licenses, permits, and registrations associated with your business. You could be able to sell or transfer some permits. For example, if you sold goods in the state, you might've obtained a sales tax certificate of authority from the DTF. In that case, you'll need to pay any final sales tax owed and surrender or destroy your certificate of authority.

If you've filed a certificate of assumed name with the DOS, you'll need to cancel the registration with the DOS. File a Certificate of Discontinuance of Assumed Name with the DOS.

You'll also need to close your LLC's bank accounts and end or settle any contractual obligations. You might be able to assign your contract rights and obligations to someone else.

Additional Guidance on Dissolving Your LLC

Dissolving and winding up your LLC is just one piece of the process of closing your business. For more guidance on many of the other steps involved, see our checklist for closing your business.

In addition, the DTF has a detailed checklist of steps to complete to end or close your business, including links to forms and important deadlines.

If you have more questions or need legal assistance, you should speak with a New York business lawyer. Many business owners can dissolve their LLCs on their own. But you might want to seek legal help if there are disagreements among members, complicated debt settlement negotiations, or ambiguous contract assignment terms.