When closing an LLC, it is essential to follow the dissolution process correctly to avoid liability for taxes and professional licensing fees -- and to protect your professional reputation. In dissolving the limited liability company, or LLC, you will notify New Jersey state departments, pay remaining debts, close accounts, sell assets and distribute any remaining assets to the LLC's members. Throughout the process, the LLC's operating agreement will be the guiding document.
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Review the operating agreement. If there is an agreement in place, it may specify when and how the LLC may be closed, and how the assets should be distributed. For example, the agreement may state that the decision to dissolve must be unanimous.
Vote to dissolve the LLC. If the LLC has more than one owner, there must be at least a majority agreement to close the company, unless otherwise specified in the agreement. Make a written agreement to close the company, and have all the members sign the agreement.
File a Certificate of Cancellation with the New Jersey Department of Revenue. Download the form from the Department of Revenue website. Fill out the form with the company name, business entity number, date of formation and dissolution, and reason for closing the business. Submit the form with the appropriate filing fee.
Cancel registrations, licenses, and permits in the LLC's name. For example, if your LLC was registered as an accounting firm, contact the Board of Accountancy to cancel the license for the LLC.
Pay outstanding debts. Pay off outstanding loans and address any remaining business contracts. Distribute final paychecks to all employees by the employees' last day of work.
Provide notice to potential creditors that the LLC is closing. Also, notify any business associates that owe money to the LLC.
Liquidate assets. Review the assets of the LLC, including merchandise, equipment, and leases, and create a plan to sell each asset. Consider hosting a "going out of business" sale or a public auction to liquidate assets.
Put aside money for known obligations. For example, you may owe taxes on your final tax return to the state or the IRS.
Distribute remaining assets to members. The amount of distribution may be determined by the operating agreement. If not otherwise specified, first pay members to reimburse them for their contributions. Then, distribute the remaining assets in proportion to the members pursuant to their ownership interest, which is determined by how much time and money the member put into the LLC.