How to Dissolve an LLC in New Hampshire

Basics of LLC dissolution

LLC dissolution

What is an LLC dissolution? It is the legal dismantling of your business operations, ensuring that you can cease operating your LLC in an orderly, sensible way. Just as establishing a New Hampshire LLC requires filing the proper documents, dissolving one also involves legal filings. Once your LLC dissolves, it can only wind up its affairs. When winding up is complete, you file a Certificate of Cancellation with the Secretary of State to end the LLC’s existence.

Dissolution can occur for multiple reasons. Sometimes, it’s in the owners’ financial best interests to cease operations. Other times, there’s a need to dissolve the LLC due to a transaction involving ownership of the business, either acquiring a new company or being acquired. Finally, courts may require an LLC to dissolve via a court order.

The process of LLC dissolution varies from state to state. Specific state laws mandate the way an LLC must dissolve its operations. In New Hampshire, those regulations involve taxes, bank accounts, employees and filings with state agencies.

Types of LLC dissolution

There are three categories of LLC dissolution. The type of dissolution your LLC uses will depend on the circumstances related to your business closure.

Administrative dissolution

An administrative dissolution happens when the state of New Hampshire deems that the LLC is no longer in compliance with guidelines governing the operation of such companies within the state. The Secretary of State can administratively dissolve a New Hampshire LLC if, for two years in a row, it doesn’t file its annual report or pay the annual report fee within 60 days of the due date; if it has no registered agent or registered office in the state for 60 days or more; if it doesn’t tell the Secretary of State about a change of registered agent or office within 60 days; or if the period of duration in its certificate of formation expires (RSA 304-C:136).

The LLC can apply for reinstatement within 3 years ($135). After 3 years, a late reinstatement costs $500.

Judicial dissolution

A member can ask the superior court to dissolve the LLC if it’s no longer reasonably practicable to carry on the business, or if the members are deadlocked and the LLC is suffering irreparable harm or can’t manage its affairs.

A court can also dissolve an LLC that got its certificate of formation through fraud, exceeded or abused its authority, or has conducted business in a persistently fraudulent or illegal way (RSA 304-C:134).

Voluntary dissolution

A company can choose to dissolve its operations for various reasons.

An LLC dissolves voluntarily when an event named in its operating agreement happens, or when the members vote to dissolve. Unless the operating agreement says otherwise, a majority vote of the members is enough. The vote should be in writing and state an effective date (RSA 304-C:129). The death of a member doesn’t automatically dissolve the LLC. In a single-member LLC, the membership passes to the member’s estate (RSA 304-C:131).

Usually, voluntary dissolutions occur based on detailed procedures that are laid out in an operating agreement that governs these critical actions.

Dissolving your LLC in New Hampshire

There are specific steps that need to be completed to dissolve your New Hampshire LLC. Usually, these steps are completed in the order presented here though situations may vary.

Step 1: Vote to dissolve the LLC

The process of dissolving your LLC typically begins with a formal vote to complete that task. This vote will be done under the rules laid out in your operating agreement and involve the members (owners) of the company.

Under New Hampshire law, a majority vote of the members is enough unless your operating agreement requires more, such as a unanimous vote.

It’s important to maintain detailed records of the meeting where the dissolution vote is taken. These records should be kept securely with other important business records.

Single vs multi-member LLC dissolution

When you have a single-member LLC, the process is quite easy. As the only owner of the company, you do not need to hold a formal vote to dissolve. Instead, you simply follow the other steps outlined here to ensure the proper procedures are followed.

If there are multiple members, it’s critical to ensure everyone understands their roles and the process, timing and costs of dissolution.

Dissolution rules in your LLC operating agreement

The New Hampshire operating agreement you create when forming your LLC is essential at many stages in the creation and operation of your business. In some ways, the process of dissolution is one of the most essential.

It’s a legally binding guide to all the critical steps taken within your business and can provide a clear roadmap to follow during the dissolution process.

The agreement should provide details not only for how the formal vote will occur, but also how company assets are distributed, debt obligations are divided and contracts are canceled.

Step 2: Wind up all business affairs and handle any other business matters

Winding up your business affairs is a critical element of dissolution. There are many steps to this process and it’s important to ensure that you consider all aspects of your company that need to cease prior to operations ending.

These tasks ensure that key business matters are halted. These steps stop certain business processes, cash flows and legal matters. They include:

• Canceling any existing business licenses or permits required by the state or the local municipality where you operate
• Informing suppliers and customers that the business is closing
• Keeping your registered agent until the Certificate of Cancellation is filed, then canceling the service
• Communicating to employees about the closure
• Closing business banking accounts and credit cards

Step 3: Notify creditors and claimants and settle existing debts

Your creditors and any legal claimants against your company need to be notified about the business closure. There may well be financial obligations that need to be resolved as part of these communications, ensuring that those to whom you owe money are rightfully paid.

In addition, you will need to make sure that you cover all your other debt obligations, including any outstanding business loans, business credit card balances or invoiced amounts due to your suppliers.

For the company to be properly dissolved, all these financial debts must be paid off and that you do not have any liability exposure.

Often, companies that are dissolving will notify all claimants and creditors via written notice with a deadline by which any unknown claims are filed. If you have claimants that are unknown, you may need to publish a legal notice in a newspaper.

Another need may be to liquidate assets that are owned by the LLC. The proceeds of these sales may need to be distributed to members as per the operating agreement.

Step 4: Notify tax agencies and settle remaining taxes

Clearing tax obligations is a key step in the dissolution process. It starts with the state Department of Revenue Administration. You will need to request a certificate of dissolution. New Hampshire law requires this certificate before the LLC distributes its assets to members (RSA 77-A:18). It can take about 60 days. To request it, you will need to provide a statement that includes the following:

• Your final New Hampshire business tax returns, with copies of all federal pages as filed with the IRS
• A statement on how all New Hampshire assets were disposed of
• Federal Forms 4797 and 6252, if they aren’t included with your federal return
• Minutes of the meeting during which the vote authorizing the dissolution was taken
• A schedule that details distribution of all New Hampshire assets. Note that the assets should not be distributed until the certificate of dissolution is obtained

A certificate of dissolution can be done online at Granite Tax Connect for a nonrefundable $30 fee.

You can also download form AU-22, Certification Request, and mail it with the fee to:

Taxpayer Services Division

PO Box 637

Concord, NH 03302

Step 5: File a certificate of cancellation with the Secretary of State

To formally dissolve your business, you will need what is called a certificate of cancellation from the Department of State (in other states, this document is called a certificate of termination).

While the form to file for the certificate is simple, there are several steps that need to be taken prior. There is a $35 filing fee (plus a $2 handling charge if you pay online).

First, the state details that any assets must first be distributed as follows:

• Payments or payment provisions to creditors, including members who are also creditors
• Members and former members to satisfy liabilities unless an operating agreement dictates otherwise
• Members to return contributions or financial interests, unless the operating agreement stipulates otherwise

The state also has guidelines about when the documents filed become effective, either when filed, at a time specified in the agreement, or when accepted by the state if filed electronically.

The form is very simple and only includes the following fields:

• Name of the LLC
• The reasons for filing for the certificate
• Any future effective date (within 90 days of the filing date)
• Signature, printed name, title and date (signed by a manager, or by a member if the LLC has no manager)

There are three ways to file:

1. Online through the Secretary of State’s QuickStart system
2. By mail. Send completed form to:
   Corporation Division, NH Dept. of State
   107 N Main St., Rm 204
   Concord, NH 03301-4989
3. In person:
   State House Annex
   3rd Floor, Rm 317
   25 Capitol St.
   Concord, NH

Conclusion

Dissolving your LLC takes careful planning, communication and coordination. However, by following the steps for votes, winding up affairs, tax documentation and filing paperwork, you can complete these steps with ease.

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