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How to Dissolve an LLC in New Jersey
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To dissolve your New Jersey LLC, you must submit a Certificate of Dissolution and a Statement of Termination to the Department of the Treasury Division of Revenue and Enterprise Services.
However, you must take several more steps to close your business in New Jersey to avoid potential fees, fines, and future tax liabilities.Â
Follow these steps to ensure a smooth and legally compliant dissolution process.
Basics of LLC Dissolution
LLC dissolution officially shuts down your New Jersey limited liability company by canceling its legal entity existence and ending its contracts, assets, and liabilities.
Types of LLC Dissolution
Voluntary, administrative, and judicial are the 3 different dissolution types.
Each type applies to a different reason for dissolving an LLC. The most common type of LLC dissolution is voluntary.Â
Administrative Dissolution
Administrative dissolution occurs when the New Jersey Secretary of State takes action to remove a business entity’s rights, powers, and authority because it fails to comply with certain LLC entity statute obligations.Â
For example, obligations of the LLC entity statute can include:
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Failure to collect and pay sales tax. -
Late or non-delivery of an annual report. -
Failure to pay a fine or late penalty fee to a New Jersey government department. -
Lose of a certificate of good standing .
Judicial Dissolution
A New Jersey court issues judicial dissolution to close an LLC for failing to comply with state laws or, most commonly, when an LLC member requests the court to dissolve their LLC for one of the following reasons:
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Unresolvable disagreements between members. -
An LLC member does not fulfill their fiduciary duty. -
Fraudulent activities by an LLC member or manager. -
Misappropriation of LLC assets. -
Failure to run the LLC as per its operating agreement.
Voluntary Dissolution
When LLC members agree to end their business, this is voluntary dissolution.
Voluntary dissolution occurs for many reasons, such as internal member disputes on how to run the LLC, an economic downturn, or a dissolution trigger being activated, such as a member dying or leaving the LLC.
Dissolving Your LLC in New Jersey
Each U.S. State has specific steps and rules for voluntarily dissolving an LLC.
In New Jersey, dissolving an LLC requires filing a Certificate of Dissolution, a Statement of Termination, and conducting business using the LLC after dissolution, except for winding up its affairs, is illegal.
Step 1: Vote to dissolve your New Jersey LLC
New Jersey State requires all multi-member LLC owners to give their permission to dissolve the business.
To vote for dissolution, you must hold a meeting all members can attend, and the vote should comply with the LLC operating agreement’s requirements for dissolution.
Single vs multi-member LLC dissolution:
Single and multi-member LLCs must follow the same New Jersey rules for dissolving an LLC; the only difference is a single-member LLC does not need to vote to close the business.
Dissolution rules in your LLC operating agreement:
Your LLC operating agreement should contain the specific steps to dissolve your business.Â
Members must refer to the LLC operating agreement before voting for dissolution to ensure their reason for closing the business complies with the operating agreement’s terms. Â
Operating agreement dissolution rules can include the following:
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The voting schedule. -
The percentage of members who are required to agree on dissolution. -
The procedure for closing the LLC’s activities. -
The procedure for paying all LLC debts and other liabilities. -
Asset distribution amongst members.
New Jersey-Specific rules for voting to dissolve your LLC:
LLCs without an operating agreement or articles of organization that outline the dissolution requirements must follow the New Jersey state rules for dissolving an LLC.Â
New Jersey’s rules for voting to dissolve an LLC include:
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An LLC pre-set dissolution date has passed. -
A dissolution trigger occurs as per the LLC operating agreement. -
The death, retirement, or resignation of an LLC member unless all other members vote to continue running the business. -
Bankruptcy. -
A New Jersey court mandates dissolution.
Step 2: Wind up all business affairs and handle any other business matters
Winding up your LLC means ending all its business activities per your operating agreement and New Jersey State law.Â
Under New Jersey’s LLC Act, you must take several essential winding-up steps to close your business; those include:
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Finalizing LLC debts, obligations, and other LLC liabilities. -
Resolving internal or external disputes. -
Ending any LLC contracts and activities. -
Canceling your LLC business licenses or permits. -
Closing your LLC business bank accounts. -
Transferring any LLC property. -
Paying all the LLC outstanding debts. -
Distributing LLC assets. -
Informing your registered agent.
Step 3: Settle debts and assets with creditors
LLC members must notify all creditors prior to dissolving their New Jersey business to allow them to request payment for any outstanding debts.
Before you can dissolve your LLC, you must pay off all debts; doing so fulfills your New Jersey State LLC requirements and protects you against personal liability after you close your business.Â
Step 4: Notify Tax Agencies and settle remaining taxes
A crucial step in winding up your LLC is notifying state and federal tax agencies of its closure and paying all remaining taxes.Â
New Jersey doesn’t require filing a tax clearance certificate to dissolve your LLC. Still, you must file an annual report before dissolution.
After you pay all outstanding taxes, you can submit a Certificate of Dissolution and a Statement of Termination.Â
Use the following links to wrap up your New Jersey tax and annual report obligations:
Step 5: File a certificate of cancellation
You have 3 options for filing your certificate of cancellation: online, by mail, or in person.Â
All 3 require your LLC to be in good standing, and you must provide your LLC entity number and filing date.Â
Use the New Jersey Business Endings and Cancellation Service to dissolve your LLC online.Â
By mail or in person, file a Certificate of Cancellation with the New Jersey Division of Revenue.
Division of Revenue contact information:
New Jersey Division of Revenue
Business Liquidations
PO Box 308
Trenton, NJ 08646
Phone: (609) 292-9292
You can pay the New Jersey $95 dissolution fee and the $25 tax clearance certificate application fee by check or credit card. Make your check payable to the Treasurer, State of New Jersey.Â
Conclusion
Dissolving your New Jersey LLC requires several steps before the State approves your dissolution application.
Most of those steps help you pay your LLC debts and tax requirements; some remove your financial liability after closure, and others ensure you remain in good standing with the state, allowing you to start another LLC if and when you want to.Â
FAQs
You might want to dissolve your New Jersey LLC for many reasons, including internal member disputes, increased market competition, or retirement.
The reason doesn’t matter; what matters is you dissolve according to the operating agreement and New Jersey dissolution rules.Â
Not dissolving your LLC can cause financial liabilities, including annual New Jersey and federal tax payments, fines, and debts for failing to pay those taxes.
New Jersey State Department of the Treasury Division of Taxation charges a $95 dissolution fee and a $25 tax clearance certificate fee to dissolve an LLC.Â
You can dissolve your LLC online using the New Jersey Business Endings and Cancellation Service.Â
LLC dissolution times depend on whether you apply by mail, in-person, or online.
New Jersey dissolution times:
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By mail: 3 to 10 days plus mail delivery time.
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In-person: 8 to 10 business hours.
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Online: Online cancellation times can be immediate if you provide all the information required to dissolve your LLC and pay the fee to the Division of Revenue.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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