If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits.
Dissolving a business can seem overwhelming, but with careful planning and the right legal guidance, you can protect your interests and ensure a smooth transition. At Scarinci Hollenbeck, our experienced attorneys are here to help you navigate every step of the business dissolution process.
Why Formal Dissolution Matters
Voluntary dissolution is the official process of ending your business’s legal existence. This step is essential for several reasons:
Eliminate Ongoing Expenses: Once your business is formally dissolved, you are no longer required to file annual tax returns, prepare annual reports, maintain a registered agent, or fulfill other compliance obligations. Admin dissolution for annual report deficiencies can occur when businesses fail to meet these ongoing requirements.
Reduce the Risk of Lawsuits: If your business is not properly dissolved, third parties may still sue it as if it were operational, exposing you to unnecessary legal risks.
Avoid Costly Penalties: Failure to dissolve your business can result in penalties for non-compliance with state and federal regulations.
Protect Your Personal Assets: Proper dissolution can shield you from personal liability. For example, in New Jersey, corporate officers or directors may be held personally liable for unpaid taxes if assets are distributed before all obligations are met.
Ensure Orderly Payment of Debts and Distribution of Assets: Dissolution provides official notice to creditors and business partners, establishing a clear process for settling debts and distributing remaining assets.
Key Steps to Dissolve a Business in New York
Dissolving a business involves several important steps to ensure all legal and financial obligations are satisfied. Here’s what you need to do:
1. Notify Government Agencies
The dissolution process varies by state and entity type. In New York, LLCs must file Articles of Dissolution with the Secretary of State, while corporations must first obtain written consent from the Tax Department before filing a Certificate of Dissolution. How to dissolve a corporation in New Jersey involves similar but state-specific requirements that must be carefully followed.
2. Settle Debts and Notify Creditors
All outstanding debts must be paid before dissolution. Notify lenders and creditors of your intent to close the business, and work with an attorney to prioritize and settle obligations.
3. Collect Outstanding Receivables
Make every effort to collect on unpaid invoices or sell outstanding claims owed to your business.
4. Liquidate Assets
Sell or transfer all business assets, including equipment, inventory, real estate, and intellectual property. After debts are paid, distribute any remaining funds to shareholders, members, or partners.
5. Comply with Employment Laws
If your business closure involves employee layoffs, you must issue final paychecks and comply with all labor laws. Businesses with 50 or more employees may be required to provide advance notice under the WARN Act. Understanding bankruptcy trends can help business owners explore alternatives to dissolution when facing financial difficulties.
6. Notify the IRS
Inform the IRS of your business closure, close your Employer Identification Number (EIN) account, and file all final tax returns, including income, employment, and sales tax.
7. Close Business Accounts and Cancel Licenses
Close all business bank accounts, credit cards, insurance policies, and cancel any business licenses or permits.
8. Retain Business Records
Maintain important business records even after dissolution. For example, the IRS requires employers to keep employment tax records for at least four years after the tax was due or paid. Learn more about IRS recordkeeping requirements.
How Scarinci Hollenbeck Can Help with Business Dissolution
Formally dissolving your business is essential to protecting your legal and financial interests. At Scarinci Hollenbeck, our dedicated business dissolution attorneys have decades of experience guiding corporations, LLCs, and partnerships through every aspect of business closure.
From negotiating dissolution agreements and managing employee layoffs to filing final paperwork and resolving outstanding liabilities, we are committed to making the process as seamless as possible—so you can move forward with confidence.
Ready to dissolve your business or have questions about employee layoffs and business closure? Contact Scarinci Hollenbeck today to schedule a consultation and protect your interests every step of the way.
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
