There are many times in business that it is appropriate to close down or go out of business. The business may have failed or no one remains who is interested in keeping the business alive. When the business is a corporation, it is important the corporation be formally dissolved. When handled properly, dissolution of the corporation formally ends the existence of the corporation and limits your liability concerning the corporation in terms of state taxes, corporation fees, and claims made by creditors and other claimants.
Steps for Dissolving a New York Corporation
There are several steps to dissolving a New York corporation. These steps include the following:
- Decide on voluntary dissolution. It must be decided that the corporation will be dissolved, which can be accomplished in one of three ways:
- Shareholder vote,
- Shareholder written consent, or
- The occurrence of a specified event provided in the certificate of incorporation that allows for the dissolution of the corporation by one or several shareholders.
Getting shareholder approval to dissolve the corporation can get complicated quickly, and a New York business lawyer can help you understand which course of action you must take to get the process of dissolving the corporation underway.
- Tax reporting and obtaining consent from the New York Tax Department. A corporation must be up to date on its taxes in order to obtain consent from the New York Tax Department to dissolve the corporation. A “final” corporation tax return must be filed. If the corporation’s taxes are in order, the tax department will issue a written consent to the dissolution of the corporation.
- Corporations that have done business in New York City may also have a tax obligation under the NYC administrative code. If this is the case, the corporation will need to settle up on those taxes or charges and obtain consent for the dissolution of the corporation from the NYC Commissioner of Finance in addition to the consent provided by the tax department.
- Complete the certificate of dissolution and file it with the New York Department of State. With the consent to dissolution from the New York Tax Department and the NYC Commissioner of Finance (if applicable) in hand, you can complete a certificate of dissolution, pursuant to NY Bus. Corp. Law Section 1003. The certificate of dissolution must be submitted with copies of the written consents obtained from the New York Tax Department and the NYC Commissioner of Finance (if applicable), and a fee of sixty dollars must be paid.
The above steps are merely an overview of the dissolution process. Each corporation is likely to face unique hangups and challenges at any stage of the process, based on the corporation’s specific situation. A skilled New York business lawyer can help you work through all aspects of winding down your business and dissolving your corporation.