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New York Business License

Date: 03/18/2018 | Category: | Author: Jakub Vele

New York Business License

Do you require a business license or a permit to form and operate an LLC or a Corporation in the State of New York? Yes, you do. Every state in the U.S., has different a set of requirements when it comes to issuing business license or permit. This license is also known as an operational license in several states and will ensure you are able to operate your business with ease.

How do you get a New York company license? What are the requirements? What type of business licenses exist in the state? These are some of the questions that you will be confronted with. So, let’s get an insight into how business licensing works in the state of New York.

Obtaining a New York State Business License

One of the primary and important aspects is that the issuing authority for a business license in New York will vary according to the industry, and at the same time, all types of businesses don’t require a license. Some business establishments require a license while others require a permit. How and where can you get your New York company license from? Do you require a license or a permit? What is the fee? Who issues the licenses or permit? These are some of the questions that can be answered through the following examples.

Catering Establishment License

If you are planning to start a catering company or business then you will require a business license in New York. A catering establishment license is required primarily for catering hall or a restaurant. Any place, room, or even space where food and beverages are being served and entertainment is permitted for an event will require this license. Such an establishment could be an LLC, corporation, general partnership, limited liability partnership, non-profit, and S Corporation among others.

In such a scenario, you will be required to submit a “New York State Sales Tax Identification Number”, and a copy of “Certificate of Occupancy” along with the form for catering establishment license. The fee for this type of business license can vary from $100 to $1,070. You can file it in person or online. This license is currently being issued by NYC Department of Consumer Affairs (DCA), Licensing Center, NY.

Food Service Establishment Permit

This is a permit that is applicable to establishments that are serving food for business or not for profit. The list can include restaurants, pizzerias, takeouts, bakeries, cabarets, emergency food relief organizations, night clubs, senior centers, employee cafeterias, bars, charitable and fraternal organizations, and public and non-public schools. This type of establishment is required to obtain a special permit from the Department of Health and Mental Hygiene (DOHMH). This type of permit is also known as a “Restaurant Permit”.

Although this is not a New York company license, you can submit your permit application online or in person at NYC Department of Consumer Affairs (DCA), Licensing Center, NY. The fee for the permit is $280. You will be required to pay an additional $25 if you are manufacturing frozen dessert.

Once you have submitted the application for a permit or New York company license, it will be reviewed by NYC Department of Consumer Affairs (DCA). They will send notification regarding the status of your license application within 2 weeks of receipt of application. The status can be any of the following:

  • If your business license application has been approved by DCA then they will issue a license document.
  • If your application requires any additional information then they will notify you through mail providing proper instructions on how to submit the additional information. If you are unable to submit the requested information to DCA within 10 days of receiving the notification mail then your application will be denied.

Once application for business license in New York is denied, you will be required to make a fresh application.

You will be required to renew your New York company license or permit through the “NYC Online Licensing system”. Business licenses are normally valid for period of 2 years and expire on September 30 of years, which end in an even number.

Note: If you have any outstanding fines then you will not be permitted to renew your license or permit until you pay the fine. Operating without a valid license would lead to heavy penalties.

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Advantages of Incorporating a Business in New York

Date: 03/15/2018 | Category: | Author: Jakub Vele

Advantages of Incorporating a Business in New York

Why are some of the top global businesses situated in New York? There are several reasons why there has been a spurt in the number of startup companies in New York being registered in that state.

New York City is considered as one of the top business-friendly destinations in the world. Whether you are considering forming an LLC or Incorporating your business, this is the destination from where you can reach out to national and global markets.

The good news is that if you are planning to register a new company in New York then you might qualify for the specific incentive programs offered by the state. These programs will benefit your LLC or Corporation in the long-term.

Advantages that Businesses can capitalize from

When we talk of advantages for a startup company in New York, there are many tax advantages, credibility factor, and the most talked about “state incentives”. Let us take a look into some of the benefits:

Advantage#1: Tax Benefits

Although, New York is not known to have the most business friendly tax environment in the nation, it does make up for this by offering several types of tax benefits as well as incentives when you register a new business in New York. This helps greatly in reducing the overall tax burden on businesses. One of the most trusted and popular tax benefit program is the “Startup New York”. As a part of the program, selected businesses (those that meet specific criteria) can enjoy 10 years of tax free operation in a specific location, that has been designed to encourage more start-ups.

Advantage#2: Federal Work Opportunity Tax Credit (WOTC)

It is a type of Federal tax credit that will be available to your business after you register a new company in New York. The tax credit is offered if your business hires individuals or employees from those target groups that have been consistently facing significant barriers when it comes to employment. The maximum amount of tax credit can range from $1,200 to $9,600, and the amount varies according to the type of employee hired. The targeted group includes:

  • Qualified unemployed veterans including those with disability
  • Ex-felons
  • Temporary Assistance for Needy Families (TANF) recipients
  • Designated Community Residents especially those living in rural renewal counties or empowerment zones
  • Food stamp (SNAP) recipients
  • Summer Youth Employees especially those living in empowerment zones
  • Supplemental Security Income recipients
  • Vocational rehabilitation referred individuals
  • Qualified Long-Term Unemployment Recipient

There are several other business incentives that you can benefit from after you register a new business in New York. Such incentives include Excelsior Jobs Program, IDA Commercial Tax Incentives, IDA Industrial Incentive Programs, Industrial and Commercial Abatement Program (ICAP), Job Creation and Retention Program (JCRP), Lower Manhattan Sales and Use Tax Exemption, and New Markets Tax Credit (NMTC) Program among others.

Are there any Disadvantages of Incorporating in New York?

Are there any disadvantages for a startup company in New York? Disadvantages are few and the most important among them is the wide array of taxes. It simply means that there are too many types of taxes as well as fees that businesses might be subjected to. This makes it difficult for small businesses to manage their tax burden at times.

The wide array of taxes however challenging is more often than not neutralized by the variety of tax credit schemes on offer. At the end of the day, the advantages and benefits for businesses in New York far outweigh the disadvantages.

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New York LLC and Corporation Registration and Formation

Date: 03/14/2018 | Category: | Author: Jakub Vele

New York LLC and Corporation Registration and Formation

The 4th most populous state, New York is divided into 62 counties with the largest being New York City and it is home to several small and medium sized enterprises. It is also home to some of the top businesses or corporations in the nation and the world including AIG, ABC, AriZona Beverage Company, Avon, Bausch & Lomb, CBS Corporation, Eastman Kodak, Kimber Manufacturing, Marvel Comics, and MasterCard among others.

There are over 2 million small businesses in the state today, which is 7.2% of the businesses across the country. So, if you are planning to form a Corporation in New York then it is one of the best choices you can make.

How do you form a New York business? Is it an exhaustive process? What all documents or information is required? If you are new to starting a business and that also is in the state of New York then the entire process right from name search to registration and formation may seem like a daunting task. That is exactly the reason why we, one of the top New York Registered Agent is there to help you through the registration process.

Let’s take a look at how to form a New York business Corporation or LLC.

New York LLC Registration and Formation

LLC company formation in New York is governed by section 203 of the Limited Liability Company Law. The procedure for registration and formation of LLC is as follows:

Step#1: Hire a Registered Agent

The Limited Liability Company Law – Article 3, Service of Process, throws light on the services provided by a Registered Agent. Section 302 – Registered Agent for service of process is the section that highlights the fact that every domestic and foreign limited liability company will need to designate a state registered agent. We would take this opportunity to share with you the fact that we are one of the top Registered Agents in the state and have been responsible for over 11,494 company formations in New York.

We are in compliance with all regulations in the State of New York.

Step#2: Choose a Name

Article 2, section 204 of the Limited Liability Company Law states that in order to initiate LLC company formation in New York, company name is of utmost importance. One of the important aspects to consider is that the chosen name will contain the abbreviation “L.L.C.” or “LLC” or without any abbreviation, the words “Limited Liability Company”. Most importantly, you will need to check for name availability, so that your business name is unique. Check name availability here.

If the chosen business name is available then download the “Application for Reservation of Name” form and submit it.

Step#3: Articles of Organization

If you are planning to form a New York business LLC then the most important step is to prepare and file the Articles of Organization for a Limited Liability Company. The Articles of Organization pursuant to Section 203 of the New York State Limited Liability Company Law has to be filed with the Department of State, Division of Corporations, STATE RECORDS AND UNIFORM COMMERCIAL CODE, Albany, New York.

Note: You will also need to submit a “Certificate of Good Standing” or a “Certificate of Authority (Form PLS709)” under seal from the appropriate Appellate Division or the New York State Department of Education, Division of Professional Licensing Services, Corporations Unit, Albany, NY. It needs to be submitted along with the Articles of Organization.

We can file the form on your behalf being your registered agent in the state and provide you with certified copies of the LLC registration.

In case, you have any questions regarding how to form a New York business, feel free to call us at 702-871-8678.

New York Corporation Registration and Formation

If you are planning to form a Corporation in New York then the procedure for registration and formation is as follows:

Step#1: Hire a registered agent

According to New York Consolidated Laws, Business Corporation Law – Article-3, BSC § 305, both domestic and foreign entities need to designate a Registered Agent for service of process. We would take this opportunity to share with you the fact that we are one of the top registered agents in the state and have been responsible for over 11,494 company formation in New York.

We are in compliance with all regulations in the State of New York.

Step#2: Choose a Name

In order to form a Corporation in New York you will be required to identify a name and reserve it. The name should contain words like “Incorporated”, “Corporation”, or “Limited”, and the name should be unique in nature. Once you have identified a name for your business, it is important that you check its availability in the name database for the state. Check name availability here.

When you file the application for “Reservation of Name” pursuant to Section 303 of the Business Corporation Law, it will be reserved for a period of 60 days.

You can file this form manually as well as online. You can download the form from here.

Step#3: Certificate of Incorporation

You can form a Corporation in New York only when “Certificate of Incorporation” pursuant to Section 402 of the Business Corporation Law has been filed. If you plan to form a professional service corporation then you will require a “Certificate of Incorporation” pursuant to Section 1503 of the Business Corporation Law while the formation of a foreign business corporation will be possible by filing an “Application for Authority” that is pursuant to Section 1304.

If you have any questions regarding New York incorporation or LLC formation, you can simply visit the New York Business formation page.

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Incorporate in New York

Date: | Category: | Author: Jakub Vele

Incorporate in New York

Some of the top companies in the world like MetLife, JP Morgan, Chase, and IBM have headquarters in New York and this is not because it is considered to be a global city. Yes, New York is the cultural, financial, and media capital of the nation but more than that, it provides a great market for businesses. Whether you are planning to import, export, or simply promote your services or products in the local market, incorporation in New York is definitely a decision that you will not regret.

Why Choose New York for Incorporation?

Why is incorporation in New York a wise business decision? There are several benefits or advantages of starting a small or medium enterprise (SME) in the state but more than that, the state offers incentives to prospective businesses. Let’s take a look at some of them.


This is a pro-business program that helps new as well as existing businesses that plan to expand. Once you set up company in New York, you will be able to benefit through this program as it offers tax-based incentives as well as highly innovative academic partnerships. As a part of this program, both new and expanding businesses will derive the opportunity to operate in the state, tax-free for a period of 10 years but only if it is set up on or near eligible college or university campus in the State.

Tax Credits

The state of New York provides provisions through which businesses can claim specific tax credits. There are two types of tax credits and they are:

  • General business corporation (Article 9-A) tax credits:
  • Business tax credits (Article 22)

Essentially these tax credits can be claimed in order to reduce the franchise tax liability applicable in the state of New York. Let’s look at an example:

If you set up company in New York that caters to Alcoholic beverage production then the Alcoholic beverage production credit under General business corporation (Article 9-A) tax credit is a refundable credit that is applicable if you meet certain criterion like:

  • Your business being a registered distributor under Article 18 of the Tax Law
  • The production of wine is 800,000 gallons of liquor or less, 60,000,000 gallons or less of beer etc.

The tax credit will be 14 cents per gallon for the first 500,000 gallons of wine, liquor, cider, or beer and 4.5 cents per gallon for each additional gallon over 500,000 gallons.

Manufacturer’s Real Property Tax Credit

Manufacturing company incorporation in New York can qualify your business for Manufacturer’s real property tax credit. You or your business will be entitled to a credit equivalent to 20% of the real property tax on your New York State business property that has been paid during the tax year. In order to derive this credit, your business can fall under any of the following categories like manufacturing, horticulture, assembling, processing, extracting, mining, refining, farming, agriculture, viticulture, floriculture, or commercial fishing.

How do you Incorporate in New York?

Is company incorporation in New York a tough process? This is one of the most common questions and the truth is that there are several steps if you follow, will make the process rather simple. We at have a team of specialists who can provide you with the proper guidance required towards setting up New York C Corporation, S Corporation, and LLC in the shortest possible period.

Here is a step by step procedure towards Incorporation in New York:

  1. Choose type of Business: Have you chosen the type of business you want to incorporate? The different types of businesses that you can actually set up include Not-for-Profit Corporation, Business Corporation, General Partnership, Limited Liability Company (LLC), Limited Partnership, and Sole Proprietorship. Know more
  2. Choose Business Entity Name: Incorporation in New York can take place only when you have identified and finalized a name for your business. There is one problem though: the name chosen by you may exist in the database and in such a scenario, you will need to identify another name. How do you determine whether your chosen name is available for a Corporation or LLC or not? This is possible when you conduct a name availability inquiry by searching through the Corporation and Business Entity database. Search here
    Note: If your chosen name exists then you can file application for reservation of name for Domestic and Foreign Corporations.
  3. Choose a Registered Agent: You will need to name a registered agent prior to company incorporation in New York. They will be responsible for initiating the processing of your “Certificate of Incorporation” for Domestic Corporation and “Application for Authority” for Foreign Corporations. We are one of the respected registered agents in New York and our service includes providing automatic notification of correspondence, review of filing documents, and forwarding of all types of incorporation related documentation.
  4. Articles of incorporation: You will need to file “Certificate of Incorporation” for Domestic Corporations and “Application for Authority” for Foreign Corporations. We can always file on your behalf through the standard process of online or through expedited process.
  5. Date Stamped Copies: As a part of the process of company incorporation in New York, we will ensure, you receive date-stamped and filed copies that verifies the state has filed as well as formed your corporation.

Costs and Fees associated with New York Incorporation

What would it cost to set up company in New York?

Check Fees here!

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Date: 03/13/2018 | Category: | Author: Jakub Vele


While forming the business, nobody thinks of his business falling into bad standing. But sometimes it happens. There are instances where a business entity fails to timely file an annual report, its duration expires, fails to maintain a registered agent, or in several other situations, the Secretary of State administratively dissolved that entity. There are other circumstances when a struggling business simply does not fulfill the other state requirement that’s needed to keep them compliant. Let’s discuss in detail about this situation.

What do you mean by Reinstatement?

Reinstatement is the process of returning a non-compliant or inactive company to good standing within a state. Business entities such as Limited Liability Companies (LLC), C Corporations and S Corporations face ongoing state formalities such as state/ franchise taxes, annual reports or statements, and their related filing fees. If a company fails to complete these steps, it risks falling out of “Good Standing” in a state. Also, if you’ve delayed your payment, or have skipped filing the right forms, your state can take action against your business by dissolving your Limited Liability Company (LLC) or Corporation and withdrawing its status.

Your LLC or Corporation status can be revoked for some reasons, including:

  • Failure to pay franchise taxes
  • Failure to pay certain state fees
  • Failure to file annual reports

So when your LLC or Corporation loses its status, you also lose the legal protections provided by that status, imperiling shareholders or LLC members to personal liability.

What Does it Mean to be in Bad Standing?

When a company fails to meet all the requirements of its home state of incorporation, or any additional state(s) in which it conducts business (Foreign Qualification, additional U.S. states where it conducts business), it can fall into “Bad Standing”.

For instance, a small business usually falls into bad standing if it fails to file its annual report promptly; if it fails to pay the registered agent, he may resign from representing your business (it usually happens for small business). In many states, if you fail to pay your franchise tax or if you don’t meet the state publication requirement, you may get into bad standing.

Companies that are in bad standing for a longer time can be at risk of getting the company being dissolved or revoked by the state. When a state administratively dissolves a Limited Liability Company (LLC) or Corporation or denies the company’s Corporate or LLC status, the privileges of each company formation, including limited liability protection are lost.

How to Reinstate Your Small Business Back to Good Standing?

If a company falls into the bad standing with its home state or the state(s) in which it has a Foreign Qualification, or if it has been dissolved because of not complying with the state rules and regulations, then a company is required to undertake the reinstatement process.

Reinstatement expects a company to resolve outstanding business compliance problems and submit necessary fees and forms to the state. Below is a list of the important requirements that a business requires to meet in order to be reinstated to good standing:

  • The initial step is to identify the steps that are required to become compliant.
  • You must clear all the overdue or outstanding fees due to the state.
  • A small business must receive and finish all the essential forms required to be reinstated
  • Audit these reinstatement forms, check for any errors before submission
  • Submit completed reinstatement forms to the relevant state agencies

With reinstating your business, you regain all the benefits and powers of both your Corporate status and the Limited Liability protection that befalls with it. Once you have reinstated your business, you will gain your peace of mind. You can enter new contracts and continue operating your services without worrying that your business has an unresolved legal status.

Why is Reinstatement important?

Companies that are in the bad standing fear the administrative dissolution or revocation by the state. If a company continues to be in the bad standing for a longer time, the state administratively dissolves an LLC or Corporation or revokes its Corporate or LLC status, the privileges of each entity type, such as the limited liability protection provided to owners are lost. To preserve these advantages, a business with bad standing should speed up the process and make sure all the state filings and forms are filed correctly and timely.

Why would I file a Reinstatement?

If your company has missed a necessary state filing such as an annual report, or you miss your last date to pay a franchise tax, your company may fall into bad standing with the state. You would be required to file a Reinstatement to renew your company to Good Standing.

What if You Want to Dissolve Your Company?

If your small business is in bad standing with the state and you wish to dissolve it, most states expect a reinstatement to be filed before approving the dissolution. As a side note, some states also approve a reinstatement to be filed if the company has dissolved, but they also expect to reverse the dissolution to begin again transacting business under the same company.

How can IncParadise help me?

Do you need somebody to do the Reinstate for you? IncParadise can help you. We’ll help you in finding the reasons your business has fallen out of good standing and will help you take the required actions to return it to full status. We will help you in contacting the Secretary of State. We will examine your filing and decide how to reinstate your company, including the cost. Moreover, we will help you in completing the required documents, and get them to you for signature. Once we have all the required documents, we will file the Reinstatement with the Secretary of State or other relevant state offices.

IncParadise can help restore your company to good standing after it has been dissolved or voided by the state for failure to meet its good standing requirements.

When you work with IncParadise, our Reinstatement professionals will:

  • Recognize any pending state fees your business owes
  • Obtain the exact Reinstatement Forms on your behalf
  • Examine your finished Reinstatement Forms
  • Submit your Reinstatement Forms to the appropriate state agencies
  • Notify you once your company is Reinstated

It’s necessary to realize that if your business has been voided for some time, another entity may have taken its name. As part of the Reinstatement process, IncParadise will make sure that your business name is still available. Note that, for tax clearance, businesses should contact their State Tax Departments directly for assistance. We charge $89.00 + State fees/Annual Fees for Reinstatement.

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Reinstatement for Nevada Corporation (Inc.)   Reinstatement for Nevada LLC

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Date: 03/07/2018 | Category: | Author: Jakub Vele


It is always a tough decision for an entrepreneur to dissolve his company. But there comes a time when he cannot further continue with the business operations. It’s a stressful time and requires a multi-step process. Dissolving a company is much more than just locking the front door. To dissolve a company, we need to officially and formally close the business. You need to deal with the assets and liabilities properly, in the same way, that an executor would settle all assets, debts, and affairs of a deceased person. Let’s understand what actually is business dissolution, what steps are required and why it is required.

What do you mean by business dissolutions?

According to the Business Dictionary, Business dissolution is defined as the end of a firm’s independent existence. Businesses dissolve for several reasons, such as if the owner retires and has no one there to take his place, if the owner wants to change of careers or one of the most common reasons is if the business goes bankrupt. In some of the cases, the businesses undergo administrative dissolution, which happens when the state government forces the business to dissolve after it fails to pay the taxes, fails to submit an annual report or fails to keep up with some other aspect of its responsibilities.

Business dissolution indicates that it ceases to exist as before. It may resume in the form of a merger, a partnership, a consolidated company, and as a new company altogether. Business dissolution may result in the new entities. Dissolving a business requires the sending of Articles of Dissolution and a notice of intent to dissolve to the particular state and county offices of business license issuance. Also, sometimes you may need the evidence of debt repayment and profit distribution to complete the legal requirements for business dissolution.

Reasons for Dissolutions

The reasons for dissolution can be as simple as low cash flow or as intricate as conflicting partner disagreements. To avoid fines, fees or continued liability by legally closing a company can be reasons why business owners officially dissolve a business. Here are some of the reasons explained:

  • Partnership Disagreements: About 50% of the businesses in the U.S dissolve because of the differences in the opinions of the partners. Partners might not be able to settle the disagreements related to each one’s role, which new products or services to offer. The main reason is that they might not be able to reconcile their disputes over the issues they once agreed to in the legal documents. And according to those documents, the partners are likely expected to close the business through dissolution.
  • Low Cash Flow: It is a common reason for most of the businesses to dissolve. Businesses without enough cash cannot sustain themselves through the economic cycles. They may find it difficult to pay the debt through loans or credit charges that can’t be immediately repaid.
  • Mismanagement: A CEO with little or low vision can put its business at risk or failure. To create a company’s vision, an entrepreneur is required to set proper goals for his diversifying products and services. A skilled businessman is required to be skilled in managing all aspects of his company, including production, finance, purchasing, sales, training, hiring, and overseeing staff, unless and until he brings in a manager to look after these things. If a company lacks these things, mismanagement can become a long-term problem that no company can withstand continually.
  • Negligent Accounting Practices: It is vital for a business to keep track of all the payments and expenses. Basically, businesses require having an accounting system that prepares profit and loss statements as well as other financial documents. If all of these things are not managed properly, the outcome is dissolution. By dissolving, a business it notifies its customers, suppliers, vendors, government revenue services, banks, credit card companies, and other parties affected by the unconcerned accounting practices that the business is legally closing.

Conditions for dissolving a business

  • The company can only be dissolved from the Companies House Register if the following conditions apply:
  • The company has no assets, property or cash at the bank.
  • The company has not traded for three months; this must be a definite cessation of the trade!
  • The company has not changed its name officially in this period.
  • The creditors are circulated and requesting their approval for the company to be dissolved under this process.
  • The company has not disposed of any property or assets, which includes land and buildings, plant and equipment, debtors and other assets.
  • Creditors are given three months to acknowledge the request to dissolve the company and can even reject such a request.

The Process of dissolution

  • Corporation or LLC action: If there are more than one company owners, all of them must approve the dissolution of the business. With corporations, the shareholders must approve the action, whereas, with the limited liability companies (LLCs), the members should grant the approval. For small businesses, members or shareholders usually get involved in day-to-day operations, and are aware of the details. The bylaws of a corporation and the LLC operating agreement generally outline the dissolution process and the required approvals. To abide by the formalities of a corporation, the board of directors needs to draft and approve the resolution to dissolve. Then, the shareholders vote on the director-approved resolution. Both of these actions require proper documentation and should be placed in the corporate record book. In the case of LLCs, they are not subject to the same formalities, but documenting the decision and the member approval is recommended.
  • Filing of the Certificate of Dissolution with the state: Once the voting for the dissolution is done by the shareholders or members; you need to file all the required paperwork with the state in which the business is incorporated. Also, if the company is qualified to transact business in any other states, paperwork needs to be filed in these states as well. The process for the Articles of Dissolution or the Certificate of Dissolution varies from state to state. Some states may ask you to file documents before resolving claims and notifying creditors, whereas other states may require to file them after the process. Certain states also require tax clearance for the company before filing the Certificate of Dissolution. In such cases, any back-taxes that are owed by the corporation or LLC must be paid first. Your registered agent or Secretary of State’s can help you with the complete details.
  • Filing federal, state, and local tax forms: Ending your company’s operations doesn’t mean that your tax obligations are ended immediately. Firstly, you need to formalize your business closing with your state, IRS and the local taxing agencies. You can check the business closing checklist, which includes the required forms, links to additional state and local requirements at the IRS website. If you have employees, make sure to check the payroll reporting obligations. It is always recommended to consult your tax advisor or accountant for any of your particular requirements.
  • Notifying creditors your business is ending: Make it a point to inform all your company’s creditors by mail to explain:
    – Your corporation or LLC has filed the statement of intent to dissolve or has been dissolved.
    – The new mailing address at which the creditors must send their claim(s).
    – A list of the information that should be covered in the claim
    – The deadline for submitting the claims (often it is 120 days from the date of the notice)
    – A statement that claims will be rejected if not obtained by the deadline.
    – Your state may also allow for the claims from the creditors that are not associated with the company at the time of dissolution. You may also be required to place a notice in the local paper about your company’s dissolution.
  • Settling creditors’ claims: Creditor claims can be both accepted or rejected by your company. Accepted claims need to be paid, or adequate arrangements are required to be made with the creditors for repayment. For instance, a creditor may agree to settle the claim for less, maybe 80% than the original amount. With the denied claims, you must advise the creditors in writing that your company denies their claims.
  • Distribution of remaining assets: After all the claims are paid, the remaining assets can be distributed to the company owners in proportion to the share of ownership. For instance, if you own 60% of the business and your partner owns 40%, you receive 60% of the remaining assets. Distributions are required to be reported to the IRS. If your corporation has various stock classes, corporate bylaws usually outline the method used for distributing assets to these shareholders.

Dissolving your company cannot be used if?

A formal bankruptcy or liquidation procedure is ongoing, or its proceedings have been started. These procedures include a CVL, CVA, receivership, administration, or compulsory liquidation under the Insolvency Act 1986, or scheme of arrangement under the Companies Act 1985.

Any petition has been issued against a company (for administration or compulsory liquidation) then dissolution cannot be completed.

Consequences of Not Dissolving a Corporation

When a corporation has discontinued doing the business, and the corporate charter is no longer wanted, it is necessary that the corporation decides to dissolve in order to avoid future Corporation Business tax, penalty, and interest.

Failure to dissolve the corporation when the corporation has stopped doing business will result in the legal requirement to continue to file Corporation Business Tax returns with the necessary payment of the minimum Business tax.

The dissolution shall be regarded as filed and effective as of the date the IRS receives the properly finished and executed Articles of Dissolution, payment of all fees, and notice of Tax Clearance from the Division of Taxation. Also, all the business tax eligibilities for the corporation will be terminated as of the date the request for dissolution is received and accepted by the IRS. However, prior tax liabilities may still apply and be subject to the IRS’s review.

If dissolution procedures are not executed, and full payment of the outstanding liability is not accepted, the case will be forwarded to the Special Judgment Section, for further collection action. Also, Notice and Demand for Payment letters will be sent to the Corporation and, in the event, there is a prominent trust liability, to the corporate officers.

Is the dissolution process different for both a limited liability company (LLC) and a corporation?

Since the continuation of LLCs is less steady than that of the corporations, in this case, an external occurrence such as the death of an owner can lead to the end of company’s existence, depending upon the operating agreement. Rest, the dissolution process is the same for both the entities.

If I have registered my company to transact business in other states, do I need to dissolve in those states too?

Yes, if you have registered to transact your business in any other state(s), which means if you are foreign qualified, you need to dissolve your business in your state of incorporation and the state(s) of qualification.

How can we help you in dissolving the business?

At IncParadise, we will complete the dissolution paperwork and deal with the Secretary of State directly. Our professional team has the required experience in filing the dissolutions for companies of all shapes and sizes. Firstly, we will research your filing and identify what it will cost. Also, we will prepare the documents and get them to you for signature (if necessary). Once you return them to us, we will file the Dissolution with the Secretary of State. The State filing fee is $100 + $89 for us to do the paperwork and filing.

Online Order Form – Dissolutions

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