top of page
  • Anderson & Associates

Voluntarily Dissolving and Winding Up an LLC (NY)

Updated: Apr 11, 2023

By Tiffany Wong, on April 6, 2023

When a business voluntarily decides to shutter its doors, there are a few legal procedures that must be followed. The process can be broken down into three stages: (1) the Decision to Dissolve, (2) the Formal Filing of Dissolution, and (3) Winding Up Business Affairs. Stages 1 and 2 are generally more procedural, while Stage 3 consists of various items to consider.

Stage 1: The Decision to Dissolve

Review your Operating Agreement and Articles of Organization

  • Conduct a careful review of these documents, as well as any other potential corporate documents

    • These documents often contain specific provisions that govern how the LLC is to be dissolved

  • For example: threshold voting requirements for dissolution, how to value and distribute assets, whether any existing members have particular responsibilities throughout the process, etc.

Businesses must make the formal decision to dissolve the company

  • Must comply with the method(s) referenced in corporate documents

    • For example: requiring the written consent of all members, or only a certain percentage of members, or maybe requiring a formal vote instead

  • If the corporate documents do not address dissolution, NY’s LLC Law provides a statutory method

    • Requires the vote or written consent of a majority of members

    • Majority in this instance means more than one-half

Consider whether any consents are required before closing down the business

  • There may be existing agreements that do not allow a business to close without first providing notice or requesting consent

  • For example: most loan agreements restrict borrowers’ ability to enter into any substantive financial transactions, such as a sale of all, or substantially all, of the borrower’s assets, or liquidations

Stage 2: Filing for Dissolution

Prior to filing, ensure that all Final Taxes have been filed

  • Federal: IRS requires various items, such as a final tax return, final employment tax return, various reports, and more

    • What is required will depend on your unique situation

    • IRS has a guide for closing down a business, found here

  • State and Local: NYS Department of Taxation and Finance has a checklist of items for compliance with the state’s tax law when closing a business

    • Checklist can be found here

Filing for formal dissolution in New York essentially involves two steps:

  • (1) requesting for “Consent to Dissolve,” and

  • (2) filing your “Articles of Dissolution

Requests for Consent to Dissolve

  • If your business has done business in + incurred tax liability in the city of NY, you must obtain consent from the NYC Commissioner of Finance

    • This can be done by calling, or writing to the office

    • Mailing Address: New York City Department of Finance, Collections Division, Vendor/Tax Clearance Unit, 59 Maiden Lane, 25th Floor, New York, NY 10038.

    • Phone Number: (212) 639-9675

  • Remember to include a “Power of Attorney” form when requesting consent if you are not an officer of the corporation

    • Must be signed + dated

    • PDF can be found here

  • Note: corporations required to request consent from NYS Dept of Taxation & Finance as well, LLC’s, however, are exempt from this requirement

Filing Articles of Dissolution with New York Department of State

  • Must be filed within 90 days following dissolution and commencement of winding up the business

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

    • Typically processed within 7 days - expedited processing available

  • Includes a total of three (3) things:

    • (1) “Articles of Dissolution” Form

      • PDF form found here

      • Must be signed by an authorized individual (officer, director, etc)

    • (2) Statutory Fee of $60

      • Paid by cash, check, money order, mastercard, visa, or amex

      • Checks and money orders payable to: “Department of State

      • Note: do not send cash through mail

    • (3) Written Consent from NYC Commissioner of Finance

      • Attach a copy of the consent to the filing

Stage 3: Winding Up Business Affairs

The below checklist includes several items that should be considered when dissolving and winding up an entity in the State of New York. Please note that this list is not exhaustive. There may be specific considerations unique to individual entities that are not commonly seen.

Designate a member or manager to oversee the winding up process

  • Follow Operating Agreement or Articles of Organization if there are any provisions that govern the selection process

Open a “Reserve Account”

  • Best practice is to open an entirely separate bank account used primarily for the purpose of closing down your business

  • Funds placed in this account should be used to facilitate creditor payments and cover any other costs or potential liabilities associated with closing

Terminate any DBAs (if applicable)

  • Applies if your entity has been doing business under any other name(s) and you have fictitious business name registrations for those names

  • Remember to terminate those as well

Review all contracts, leases, permits, and licenses

  • Consider whether any contracts have restrictions or limitations on dissolution, termination, or assignment

  • Cancel any business permits or licenses that you may have

  • Look for any future contractual obligations as well

Prepare a list of creditors and provide notice to each creditor

  • Providing notice to creditors is not required under NY law

    • However, it is best practice to provide notice in case of any future claims or issue that may arise from winding up the business

  • Written notice to creditors will generally include:

    • Details claimants must include if filing a claim against the dissolving LLC

    • Mailing address for the claimant to send the claim

    • Deadline for when the dissolving LLC must receive notice of the claim

    • Statement that the claim is barred if it is not received by that deadline

    • Statement explaining when the dissolving LLC will give notice of acceptance or rejection of the claim

Provide notice to various other parties

  • Not required by law, but necessary to ensure that any future claims or issues are foreseeable or mitigated

  • Applies to anyone that you do business with

    • Examples: customers, suppliers, vendors, insurance carriers, utility companies, landlords of any property you may rent, etc.

  • If you have a website, post a notice on your website of when it will be shut down

Terminating employees (if applicable)

  • Ensure that all payroll obligations have been met, reporting and final payments

  • Consider any severance agreements that may exist

    • Payment of severance, other benefits, etc.

  • Consider any unionized employees that are protected

    • May have restrictions on termination by state law, or any collective bargaining agreements (CBA)

  • Ensure that any employee related tax forms are filed

    • For Example: NYS requires entities to file final Form NYS-45 within 30 days after the LLC stops paying wages, IRS requires entities to submit year-end W-2 withholding paperwork before the final Form 941’s due date, independent contractors must be issued a final Form 1099

  • If company has at least 20 employees, typically must offer continued health coverage and provide information about election opportunity

    • Required by the Consolidated Omnibus Budget Reconciliation Act (COBRA), more information can be found here

Address, prosecute, and defend, any lawsuits or claims

  • Applies to both current and pending lawsuits or claims

  • Any civil or criminal lawsuits that may exist

  • Any employment and labor claims from employees, internal and external

  • Address any smaller complaints from parties that you work with as well

    • Customer complaints, suppliers, vendors, etc.

Prepare an “Asset Inventory”

  • This will help to ensure that all assets are accounted for and properly sold or distributed in the end

  • Be sure to include both soft, and hard assets

  • Examples: cash, financial accounts, prepaid expenses, contracts, real estate, buildings, fixtures, equipment, inventory, office furniture, computers, vehicles, and intellectual property (trademarks, patents, etc)

Distributing Assets

  • Before making any distributions, review your Operating Agreement to determine if there are any provisions that govern valuation or distribution

  • NY LLC law requires assets be distributed in the following order:

    • First: to creditors to satisfy any debts or liabilities, including members that may also be creditors

      • If unable to pay, establish payment schedule agreements or plans

    • Second: to current and former members to satisfy any distributions that may be owed

      • Unless the Operating Agreement states otherwise

    • Lastly: to current members, first to return their capital contributions held by the LLC, then the proportion that the members share in distributions

      • Unless the Operating Agreement states otherwise

  • Note: be aware that there may be tax consequences involved with how you choose to dispose assets

Cancel your EIN and close your IRS business account

  • Send a cancellation letter to the IRS along with a copy of the initial EIN assignment letter (if available)

    • Cancellation letter must include:

      • Complete legal name of the business

      • Business’s EIN

      • Business address

      • The reason you wish to close your IRS business account

    • Send both documents to:

      • Internal Revenue Service, Cincinnati, OH 45999

  • Note that the business account cannot be closed until all returns and taxes have been filed and paid

  • If you have a state tax ID number, remember to close that as well

Note on “Assignments for the Benefit of Creditors”

While this article focuses on a traditional voluntary dissolution of an LLC, it is worth mentioning that New York law permits Assignments for the Benefit of Creditors (an “ABC”). N.Y. Debt. & Cred. Law § 2. Acting as an alternative to bankruptcy, an ABC is still considered to be a voluntary dissolution, but one that involves court supervision. ABCs are generally quicker, and more cost-effective than bankruptcy proceedings.

The LLC seeking to dissolve enters into an agreement assigning all rights, custody, and control of its assets, in trust, to an unaffiliated, independent entity. This entity is responsible for handling the dissolution and winding up of the business, including making sales of assets and distributions to the LLC’s creditors.

Note that the process does not discharge the LLC from its debts, and does not allow for restructuring. Conversely, Chapter 7 and 11 bankruptcies both result in some form of debt relief, and Chapter 11 allows businesses to continue to operate and attempt to become profitable again during the bankruptcy proceeding.

In order for the assignment to take effect, a formal assignment document must be executed and signed by both the LLC and the assignee, and it must be recorded with the county clerk’s office in the county where the principal place of business is located.

As ABCs are governed by state laws, states will have varying laws governing the process. Be sure to check with your state’s regulations to ensure that you are complying with the requirements!

Recent Posts

See All


bottom of page