How to Dissolve a Business in New Jersey | Essential Steps


Steve Bennett
Steve Bennett
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Dissolve New Jersey LLC

Deciding to dissolve a Limited Liability Company can be difficult for business owners. Still, it is sometimes necessary due to changes in the business landscape, financial challenges, or personal reasons. Dissolving a business requires specific steps and regulations to complete the process correctly and legally. This comprehensive guide will teach you how to dissolve a business in New Jersey.

Webinarcare Editorial Team will help you easily dissolve your business. You must be guided by all the factors gathered in this article.

If you are starting an LLC in New Jersey, having an operating agreement is one of the key requirements in dissolving a business. Before starting the legal paperwork, there are a few things to remember. Initially, confirm that all LLC members agree with closing the business. Once everyone is ready, voting should be used to document everyone’s assent. They must vote in favor of the dissolution before the legal procedure may begin. The procedures for the dissolution are listed below.

How to Dissolve a Business in New Jersey

Dissolving a business in New Jersey requires following specific steps to ensure a smooth and legally compliant process. The process usually includes the following steps:

Step 1: Make the Decision

Before dissolving your business, ensure this decision is right for your New Jersey business. Consider discussing the decision with your business partners, members, or legal counsel to weigh the pros and cons and determine if dissolving the business is best.

Step 2: Hold a Formal Vote

Once you’ve decided to dissolve your New Jersey business, you’ll need to hold a formal vote among the members to approve the dissolution. This step is important because it ensures that all members know and agree to the decision to dissolve the business.

To hold a formal vote:

  • Review your New Jersey Operating Agreement to determine the required voting procedures, such as the percentage of affirmative votes needed for approval.
  • Notify all New Jersey members of the upcoming vote and give them sufficient time to review the matter and make an informed decision.
  • Conduct the vote according to the procedures outlined in your operating agreement.
  • Record the vote results in your business meeting minutes or a written resolution.

If most members approve the dissolution, you can proceed with the dissolution process.

Get a Professional Service

It’s important to get legal assistance when dissolving an LLC. With that, you must have a Registered Agent. Ensure that the Registered Agent you choose is qualified and legal since they will file the Article of Dissolution for your LLC. We reviewed the Best Registered Agent Services in New Jersey for you to check out.

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Step 3: Settle the Outstanding Debts and Liabilities

You must settle all outstanding debts and liabilities before dissolving your New Jersey business. This includes paying off loans, settling pending lawsuits, paying owed taxes, and fulfilling any remaining contractual obligations. You can inform your New Jersey Business Attorney to ensure it is settled.

To settle your New Jersey business’ debts and liabilities:

  • Review your business’ financial records to identify all outstanding debts and liabilities.
  • Contact creditors, lenders, and other parties to whom your business owes money or obligations, and arrange for payment or settlement.
  • If your business does not have sufficient funds or assets to cover all outstanding debts and liabilities, consult with legal counsel to determine the best course of action for settling these obligations.

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Step 4: Distribute the Remaining Assets to Members

Once all debts and liabilities have been settled, you can distribute any remaining assets to the business members. Your operating agreement should do this or, if no such agreement exists, in proportion to each member’s ownership interest in the business.

To distribute assets:

  • Determine the fair market value of the remaining assets, such as real estate, equipment, or inventory. 
  • Calculate each member’s ownership interest in the business based on the operating agreement or their initial capital contribution.
  • Distribute the assets to each member according to their ownership interest.
  • Keep detailed records of all asset distributions for tax and legal purposes.

Step 5: File the Articles of Dissolution

After settling debts and distributing assets, you’ll need to file the Articles of Dissolution with the New Jersey Secretary of State to dissolve your New Jersey business officially. This document provides the state with notice that your business is ceasing operations and will no longer conduct business.

To file the Articles of Dissolution:

  1. Obtain the appropriate form from the New Jersey Secretary of State‘s website. Visit the New Jersey Division of Revenue and Enterprise Services’ website and navigate to the Business Registration section to find the necessary forms and instructions.
  2. Fill out the Articles of Dissolution Form with the required information, including your New Jersey business name, the date of dissolution, and any other necessary details.
  3. Pay the filing fee of $100 in the New Jersey Secretary of State’s office.
  4. Submit the completed form and payment to the New Jersey Secretary of State’s office, either by mail or online, depending on your New Jersey’s filing options.

Once your Articles of Dissolution have been processed and approved, your New Jersey business will officially be dissolved.

Mail to: 
New Jersey Secretary of State
New Jersey Division of Revenue, P.O. Box 308, Trenton, NJ 08646

Filling Fee:
$100

Step 6: Notify the IRS and Government Agencies

After dissolving your business with the New Jersey Secretary of State, you’ll need to notify the Internal Revenue Service (IRS) and other New Jersey government agencies of the dissolution. This is important to ensure your business complies with tax laws and other regulations.

To notify the IRS of the dissolution:

  1. File your final federal tax return using Form 1065 and check the box indicating that it is the final return for your business.
  2. Cancel your Employer Identification Number (EIN) in New Jersey by mailing a letter to the IRS at the address where you filed your tax return. Include your EIN, business name, and reason for cancellation in the letter.
  3. Update your New Jersey business status with any other relevant government agencies, such as the New Jersey Department of Revenue, Department of Labor, and local licensing and permitting offices.

Step 7: Cancel Licenses, Permits, and Insurance Policies

To fully dissolve your New Jersey business, you’ll need to cancel any business licenses, permits, and insurance policies associated with your business. This may include New Jersey Business Licenses, professional licenses, sales tax permits, and any other permits required for your industry.

You must contact the issuing agency to cancel your licenses and permits and follow their specific cancellation procedures. You should also contact your insurance provider to cancel any remaining business insurance policies. With the cancellation of the mentioned licenses, permits, and Business Insurances in New Jersey, you also need to remove a Registered Agent since he won’t be able to continue filing documents for your business unless you are the Registered Agent of your business. 

Step 8: Maintain Records of the Dissolution Process

For legal and tax purposes, it’s important to maintain detailed records of the steps taken to dissolve your New Jersey business. This includes documentation of the formal vote to dissolve the business, debt settlements, asset distribution records, and copies of filed state and federal tax returns.

Keep these records for at least seven years, as they may be needed in the event of an IRS audit or other legal issues arising from the dissolution.

Cost of Dissolving an LLC in New Jersey

The cost of dissolving an LLC in New Jersey can vary based upon various factors. The New Jersey Articles of the Dissolution filing fee cost $100. Other costs include any outstanding taxes or debts the business owes and potential costs for settling business contracts or selling business assets.

It’s also important to factor in professional fees, such as if you hire an attorney or accountant to assist with the dissolution process. After the LLC is dissolved, the remaining company assets are divided among the members. The exact breakdown of these costs can often be complex and will depend on the specific circumstances of the LLC, so consulting with a legal or financial advisor can be helpful.

Reasons Why an LLC in New Jersey Dissolves

There are numerous reasons why an LLC in New Jersey dissolves, and these reasons could impact other LLCs. It is best to understand the why’s and how to deal with it rather than knowing that your LLC may dissolve sooner or later. Here is the list of possible reasons why an LLC dissolves.

  1. Expired Duration: In New Jersey, an LLC will automatically dissolve if it reaches the end of its defined duration stated in the Articles of Organization.
  2. Member Vote: An LLC may dissolve in New Jersey if the members vote for dissolution. Usually, the LLC Operating Agreement outlines the percentage of member votes required to dissolve the LLC.
  3. Judicial Dissolution: A court in New Jersey may order the dissolution of an LLC if it is in the best interests of the members, especially in cases of fraud, illegal activities, or oppressive behavior.
  4. Bankruptcy: If the LLC becomes insolvent and cannot pay its debts, it may be forced into bankruptcy. This usually leads to the dissolution of the LLC.
  5. Non-compliance: If the LLC does not comply with state laws or fails to meet legal requirements, such as filing annual reports or paying taxes, the state may forcibly dissolve the LLC.
  6. Merger or Consolidation: If the LLC in New Jersey merges or consolidates with another company and the LLC is not the surviving entity, it will be dissolved.
  7. Death or Withdrawal of a Member: Unless specified otherwise in the Operating Agreement, the death, withdrawal, bankruptcy, or incompetence of a member may cause the LLC to dissolve.

Please note that the process for dissolution typically includes settling all business debts, distributing any remaining assets among the members, and filing a formal notice of dissolution with the New Jersey Secretary of State.

After the New Jersey LLC Dissolution

Once your New Jersey business has been dissolved, it typically cannot be reinstated or “taken back” after a few years. Instead, you would need to form a new LLC in New Jersey if you wish to operate a business under a limited liability company structure again.

To create a new New Jersey LLC, you would need to follow the standard formation process, which generally includes the following:

  • Choosing a Unique Business Name: Ensure that another business does not already use the name you choose in New Jersey and complies with state-specific naming requirements.
  • Appointing a Registered Agent: Designate a Registered Agent who will be responsible for receiving legal correspondence on behalf of your LLC.
  • Filing Certificate of Formation: Submit the Certificate of Formation with the New Jersey Secretary of State’s office, along with the required filing fee.
  • Creating an Operating Agreement: Draft an agreement outlining the rules and regulations governing your new LLC, including member roles, ownership percentages, and management structure.
  • Obtaining Necessary Licenses and Permits: Apply for any required business licenses, permits, and tax registrations with the appropriate state and local authorities.
  • Registering with the Internal Revenue Service (IRS): Obtain an Employer Identification Number (EIN) from the IRS, which will be necessary for tax purposes and other business activities.

Availability of the Business Name

When a business is in New Jersey was dissolved, the business name becomes available for other business owners to use after a certain period. However, the specific rules and regulations regarding the availability of a dissolved business name can vary. Keep in mind that even if the name becomes available, other factors, such as trademarks or potential confusion with existing businesses, may still impact the ability of another business owner to use the name.

FAQs

How do I dissolve my New Jersey LLC business?
In New Jersey, you can dissolve your LLC by filing a form called Certificate of Dissolution with the NJ Division of Revenue.
What happens when I dissolve my New Jersey LLC?
Once your LLC is dissolved in New Jersey, it will no longer be considered an active business entity and all legal rights and responsibilities will cease.
Do I need to close my New Jersey LLC’s bank account before dissolving it?
Yes, it is advisable to close your LLC’s bank account before dissolving it in New Jersey.
Can I dissolve my New Jersey LLC if it owes taxes?
Yes, you can dissolve your New Jersey LLC even if it owes taxes, but you’ll need to settle any outstanding tax debt first.
Do I need to inform my New Jersey LLC’s creditors if I want to dissolve it?
Yes, you must tell your LLC’s creditors that you plan to dissolve it in New Jersey.
How long does it take to dissolve a New Jersey LLC?
It takes about 5-10 business days for the NJ Division of Revenue to process the Certificate of Dissolution and approve the dissolution of your New Jersey LLC.
Can I change my mind after filing Certificate of Dissolution for my New Jersey LLC?
Once you file the Certificate of Dissolution for your New Jersey LLC, you cannot change your mind.
Do I have to provide a reason for dissolving my New Jersey LLC?
No, you don’t have to provide a reason for dissolving your New Jersey LLC.
Can I dissolve my New Jersey LLC if it has outstanding legal issues?
No, you cannot dissolve your New Jersey LLC if it has outstanding legal issues. You must resolve these issues first.
Can I dissolve my New Jersey LLC if it has members with conflicts of interest?
Yes, you can dissolve your New Jersey LLC if it has members with conflicts of interest, but you should consult an attorney first.
Who can file the Certificate of Dissolution for my New Jersey LLC?
Members or managers of your New Jersey LLC can file the Certificate of Dissolution.
Do I need to file a tax return for my New Jersey LLC before dissolving it?
Yes, you must file a final tax return for your New Jersey LLC before dissolving it.
What are the fees to dissolve a New Jersey LLC?
The filing fee to dissolve a New Jersey LLC is $100.
Can I operate my New Jersey LLC while waiting for the Certificate of Dissolution to be approved?
No, once you file the Certificate of Dissolution in New Jersey, your LLC cannot engage in business activities.
Do I need to publish a notice of my New Jersey LLC’s dissolution in a newspaper?
Yes, if your New Jersey LLC has distributed any assets, you must publish a notice of dissolution in a newspaper.
Will my New Jersey LLC’s name be available for use once I dissolve it?
Yes, your New Jersey LLC’s name will be available for others to use once it’s dissolved.
Can I reinstate my New Jersey LLC if I change my mind?
Yes, you can apply for reinstatement of your New Jersey LLC if you change your mind, but the process can be complicated.
Can I dissolve my New Jersey LLC online?
Yes, you can dissolve your New Jersey LLC online through the NJ Division of Revenue’s website.
What happens to my New Jersey LLC’s debts and liabilities after dissolving it?
Your New Jersey LLC’s debts and liabilities will remain and need to be settled after you dissolve it.
Can I dissolve my New Jersey LLC if it still has assets?
Yes, you can dissolve your New Jersey LLC even if it still has assets, but you must distribute those assets before dissolving it.
Do I need to file termination documents with the NJ Division of Taxation when dissolving my New Jersey LLC?
Yes, you need to file termination documents with the NJ Division of Taxation when dissolving your New Jersey LLC.
Can I revoke the dissolution of my New Jersey LLC after it has been approved?
No, once the Certificate of Dissolution is approved, you cannot revoke the dissolution of your New Jersey LLC.
Does dissolving my New Jersey LLC affect my personal credit score?
No, dissolving your New Jersey LLC should not affect your personal credit score.
What if I never officially dissolved my New Jersey LLC and just stopped operating it?
Even if you stopped operating your New Jersey LLC without officially dissolving it, you could still incur annual fees and taxes.
Can I continue using my New Jersey LLC’s name for a new business?
No, after dissolving your New Jersey LLC, you cannot continue using its name for a new business.
How long do I have to file a final tax return for my New Jersey LLC after dissolving it?
You must file a final tax return for your New Jersey LLC within four and a half months after dissolving it.
Can I dissolve my New Jersey LLC if it has a pending lawsuit?
No, you cannot dissolve your New Jersey LLC if it has a pending lawsuit.
Will I receive confirmation from the NJ Division of Revenue when my New Jersey LLC is dissolved?
Yes, you will receive a Certificate of Dissolution from the NJ Division of Revenue once your New Jersey LLC is dissolved.
What is a Certificate of Dissolution?
A Certificate of Dissolution is a legal document that officially terminates the existence of your New Jersey LLC business.
Do I need to notify anyone else besides the New Jersey Division of Revenue and Enterprise Services when dissolving my LLC business?
Yes, you need to notify the New Jersey Department of Labor and Workforce Development and the New Jersey Division of Taxation.
What happens if I don’t file a Certificate of Dissolution?
You may continue to be liable for annual reports and taxes, even if your LLC is no longer active. This may lead to unnecessary expenses.
How do I notify the New Jersey Department of Labor and Workforce Development that my LLC is shutting down?
You need to file a form with them called the “Employer’s Report of Change of Title or Business Constitution,” where you let them know about your LLC shutting down or changing ownership.
When should I notify the New Jersey Division of Taxation that my LLC is dissolving?
You should notify the New Jersey Division of Taxation as soon as possible after dissolving your LLC business.
Is there a fee for filing a Certificate of Dissolution in New Jersey?
Yes, the fee is $125.
Is there any penalty for not filing the Certificate of Dissolution on time?
Yes, if you don’t file your Certificate of Dissolution within a reasonable amount of time after your LLC is no longer operating, you may need to pay a late fee, which can be $150 or more.
What do I need to include in the Certificate of Dissolution document?
The Certificate of Dissolution needs to include the name of your LLC business, the incorporation date, and the reason why you are dissolving it.
What are the common reasons why a New Jersey LLC business is dissolved?
LLC businesses in New Jersey can be dissolved due to retirement, bankruptcy, death of the owner, or the decision to end the business venture.
Are there any tax benefits to dissolving my New Jersey LLC business?
It depends on your unique situation, but dissolving your LLC business can provide relief from certain taxes and obligations.
Can I dissolve my New Jersey LLC business without any legal help?
Yes, you can do it on your own, but it’s better to hire a legal professional who can guide you more effectively through the process.
How long does it take to dissolve a New Jersey LLC business?
The processing time for the Certificate of Dissolution can take up to 10 business days, so it’s best to give yourself a couple of weeks in case any issues arise.
Is it necessary to close my bank account associated with my LLC after I have dissolved the business?
Yes, it’s always a good decision to close any financial accounts, by returning the official account-opening documents of the account as well as endorsing a straight pin in the middle of specimen signature so it can be used well.
Is it necessary to file the Certificate of Dissolution in person or can it be done online?
The Certificate of Dissolution can be done online through the New Jersey Division of Revenue and Enterprise Services website.
How do I know if my LLC business is dissolved for good?
You will receive a Certificate of Cancellation from the New Jersey division, signaling the completion of the process.
Can I revive my New Jersey LLC business after dissolving it?
Yes. You can apply for reinstatement of your New Jersey LLC business as long as it’s done within three years of the effective termination date.
What happens if I don’t file annual reports for my New Jersey LLC business after it is dissolved?
If you fail to file annual reports and franchise taxes in the years following your company’s dissolution, the state can take legal action to collect funds you may owe and it may lead to the continuation of the business in New Jersey, which will result in ever larger legal fees.
Do I need to cancel any permits or licenses that my New Jersey LLC business may have been required to operate?
Yes, Any permits or licenses held will also need to be cancelled or transferred to new ownership that will take over those business activities.
Can I deduct the cost for hiring a lawyer or accounting fees to dissolve my New Jersey LLC business on my taxes?
Yes, legal and accounting fees related to the business’s dissolution can be typically deducted as a business expense on your income taxes.
Can you recommend any attorneys or law firms in New Jersey that handle LLC business dissolutions?
“Our law firm does not endorse any particular attorneys or law firms in New Jersey, however you can typically find reputable ones on legal referral websites such as AVVO or other industry directories, or by contacting the New Jersey Bar Association.”
When does my New Jersey LLC business officially terminate?
Your New Jersey LLC business can be considered as terminated only when the New Jersey Division of Revenue and Enterprise Services approves the Certificate of Dissolution.
My LLC business in New Jersey has debt; can I dissolve the business without repaying it but still exclude this from my credit profile?
While dissolving the company does not prevent debt collection efforts, including assigning your debts to a professional collection agency, settling any outstanding balances with debt collectors at the earliest is always advisable to avoid unwarranted legal actions from creditors.
How long is the waiting period customary after a New Jersey LLC is dissolved and released to file updates with the proper agencies?
Any changes or updates to do after the dissolution of the business, including updating its tax related data, professional licensing, business property registration and other related adjustments, should be made promptly.
Can I dissolve my New Jersey LLC business even if there are lawsuits/issues it is involved in?
Issues around lawsuits, filings, or anyone making claims you know are incorrect should be well resolved before commencing the LLC dissolution process.
Are there documents I need to have translated in NJ court proceedings to dissolve my company in New Jersey?
It may be necessary to have a Content Accuracy from certified translation professionals sign documentation translation as being accurate by the legal office overseeing the business dissolution process.
What happens to the LLC name once it is dissolved in NJ?
Once an LLC is dissolved in New Jersey and another similar business uses the name of the dissolved company doing so misrepresentedly can lead to legal complication further down the road which can never help merge brands as followers of both business will consider them as one.
Am I personally liable for the new legal/service fees after dissolving the New Jersey LLC business?
As high service and legal fees continually prolong already closed dealings, dissolving the LLC in your name is responsible for categorizing those fees based on stipulated timing details agreed initially, in order not to count against your own credit.

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Conclusion

Dissolving New Jersey business can be complex and time-consuming, but following the steps outlined in this guide will help ensure a smooth and successful dissolution. By conducting a formal vote, settling debts and liabilities, distributing assets, filing the Articles of Dissolution, notifying government agencies, and canceling business licenses and permits, you can legally dissolve your New Jersey business and move forward with the next chapter of your professional life.

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