Dissolving a limited liability company (LLC) in New Hampshire is a major moment in the life cycle of your company. Whether you are selling the business, merging it with another company or simply deciding it’s time to move on, dissolving your LLC is an important consideration.
This post will highlight the key steps to take to effectively dissolve your LLC in accordance with New Hampshire state laws. Knowing how to dissolve your LLC means understanding the documents that need to be filed, the notifications that are required and how to avoid problems as you wind up business operations.
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. Once you legally file articles of dissolution, your business cannot operate within New Hampshire.
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.
There are three categories of LLC dissolution. The type of dissolution your LLC uses will depend on the circumstances related to your business closure.
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 most common reasons for an administrative dissolution are failure to comply with applicable state laws or failure to file a required report with the state.
States have broad latitude to determine whether a company is in compliance. Other common reasons include failing to maintain a registered agent in the state or not paying taxes.
A judicial dissolution is often referred to as the corporate death penalty. Courts can choose to order an LLC business dissolution for various reasons.
The most common reason that a court will issue this ruling is when some members of an LLC petition to disconnect themselves from the company. Often, this occurs when there is a business disagreement that cannot be resolved or members believe other members are acting illegally.
Other reasons for a judicial dissolution are:
A company can choose to dissolve its operations for various reasons.
Often, an action, such as the death of a key member of the LLC, triggers an automatic dissolution of the company. Other times, a vote of the members of the LLC can be taken. The majority vote carries but is based on the weighting of members’ ownership stake.
Usually, voluntary dissolutions occur based on detailed procedures that are laid out in an operating agreement that governs these critical actions.
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.
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 ownership agreement and involve the members (owners) of the company.
While a majority vote may suffice, in many cases dissolution requires a unanimous vote of all members.
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.
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.
The 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.
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:
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.
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. To do so, you will need to provide a statement that includes the following:
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
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.
First, the state details that any assets must first be distributed as follows:
The state also has guidelines about when the documents filed become effective, either when filed, at a time specified in the agreement, pr when accepted by the state if filed electronically.
The form is very simple and only includes the following fields:
There are three ways to file:
By mail. Send completed form to:
Corporation Division, NH Dept. of State
107 N Main St., Rm 204
Concord, NH 03301-4989
In person:
State House Annex
3rd Floor, Rm 317
25 Capitol St.
Concord, NH
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.
Dissolving an LLC may be necessary if you and other members determine the business is no longer profitable, has fulfilled its mission, is moving to another state, is merging or is legally obligated to do so.
There is a $30 fee to file for a certificate of dissolution from the state Department of Revenue Administration and $30 to file a certificate of cancellation with the Department of State.
Yes, you can file your certificate of cancellation online.
The certificate of dissolution can take up to 60 days. When filed online, the certificate of cancellation is effective the same day.
If you do not dissolve your New Hampshire LLC, you may be subject to additional tax obligations and liability exposure.
If your business is registered in multiple states, you will need to dissolve it in each location.
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. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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