As we approach the end of year many Corporations and Limited Liability Companies find themselves needing to dissolve. Here’s what to expect when dissolving a corporation or a Limited Liability Company.
For corporations many states require that you obtain consent from their governing tax authority before they will accept the filing of a dissolution. For instance, New York and New Jersey have a stringent tax clearance process you must go through before you can dissolve a corporation. In NY, before you can file for dissolution with the Dept. of State you must first obtain consent from the NY Department of Taxation and Finance. Before the New York Department of Taxation and Finance will grant that consent, a corporation must be current with their franchise tax return filings, payment of taxes and a “final franchise tax return” must be filed (and marked such) along with payment of any taxes due per that return.
New Jersey also requires tax clearance. A tax clearance certificate is obtained from the New Jersey Department of Treasury, Division of Taxation by filing an application for Tax Clearance. The process can take anywhere from six months to one year. If the final tax return is submitted with the application for Tax Clearance, that may speed up the process a bit. The exception to a lengthy tax clearance application process is if the corporation has never commenced business. In that case, a dissolution can be filed directly with the Secretary of State, without the need to go through the tax clearance process.
In the State of Delaware, the process is much simpler. The Secretary of State only requires that the corporation be current with its annual report/taxes. However, even though franchise taxes are generally not due until the following March, you will have to pay those at the time of dissolution.
In summary, you will find that from State to State the requirements vary.
FILING OF THE DISSOLUTION – Once you’ve met any prerequisites the next step is filing the Certificate of Dissolution and/or Articles of Dissolution according to the appropriate State statutes. Filing turnaround and costs vary from State to State. Once the Certificate of Dissolution/Articles of Dissolution are filed the corporation is no longer active.
The procedure for dissolving an LLC is much simpler than that for a corporation. In New York, the dissolution process for an LLC is simply filing Articles of Dissolution with the Department of State. No tax clearance is required. In both New Jersey and Delaware, the process is equally straightforward. “As long as the LLC is current in its annual report filings, it can merely file a dissolution or cancellation with the Secretary of State.”
As long as the LLC is current in its tax filings and annual reports, it can merely file a dissolution or cancellation with the Secretary of State.
How a Service Company can help
A service company is indispensable in dissolving a corporation or LLC. By coordinating and creating the time line for the consent process and filings that have to be made, a service company will help avoid delays caused by improper requests for consents and save a substantial amount of your time and effort. BlumbergExcelsior Corporate Services, Inc. is the leading service company in the field. For more informatin on our services click here.
Kris Delong is an experienced Corporate Services Manager with a demonstrated history of working in the legal service industry. Skilled in New York LLC and Corporations creation, LLC Publications, Entity Dissoulutions, Bi Annual Report Filing and Regersted Agent Service. A Blumberg team member since 1997.