Dissolving an LLC or Limited Liability Company can be straightforward in New Mexico, but it also involves legal obligations that must be performed in sequence and in complete detail.
It could be that your business has closed its doors forever, you are reorganizing your company, or you may not need your LLC anymore. In such situations, it would be advisable to dissolve it properly so that there are no further legal or financial implications later on.
In essence, this article is meant to consolidate several issues that one would come across while dissolving an LLC in New Mexico. These include the documents and forms to be filled out, how to approach the case, and all the minute details required for relative procedures while staying within the confines of the law of New Mexico.
Dissolution is not just submitting a form it is about legally terminating a business while following all the state and federal provisions that apply to your business.
Understanding LLC Dissolution in New Mexico
The first step would be to submit a Statement of Dissolution that includes settling all of your liabilities and assets and is instrumental in the closing of your business.
There are two rules to defend the New Mexico Limited Liability Company Act which are quite substantial rules for closure of your business whilst allowing legal status as well.
For you to be able to protect yourself and other members from future legal or financial obligations, proper dissolution is very important. If you do not dissolve your LLC properly, there is a risk of tax liabilities, legal issues, or damage to your credit score if the debts are not paid, or other obligations are not met.
Step-by-Step Guide to Dissolve an LLC in New Mexico
1. Review Your LLC’s Operating Agreement
Before initiating the dissolution process, review your LLC’s operating agreement. Usually, some articles, which are attached to the operating agreement due to its mandatory character, establish:
- Voting requirements among members.
- Procedures for asset distribution.
- Notification processes for creditors.
Following these guidelines helps prevent disputes and ensures compliance with internal rules. In cases where the LLC does not have an operating agreement, the default rules provided in the New Mexico Limited Liability Company Act apply.
2. Vote to Dissolve the LLC
After the members have understood the operating agreement, a meeting of all members should be convened to vote on the dissolution of the LLC. Such information includes:
- Date, time, and location.
- Names of attendees.
- The outcome of the vote.
The operating agreement will dictate whether a simple majority or supermajority is required for approval. Ensure the minutes are properly recorded to demonstrate that the decision was made in accordance with legal and internal guidelines.
3. File Articles of Dissolution
Member approval means that you can file Articles of Dissolution with the New Mexico Secretary of State. The submission of this document to the Secretary of State informs the government of the termination of the LLC business activity.
Important Points for Filing:
Form: Articles of dissolution form can be filled in using a DLLC-DV form.
Filing Fee: The cost is regarded to be a standard of $25.
Processing Time: It generally takes 10-15 working days but there is provision for speedy processing at an additional cost.
Submission: Since original signatures are required, the form has to be sent by post or delivered physically. The form cannot be completed and submitted over the Internet.
Filling in the form some certain fields incorrectly will lead to lag in businesses or potential rejection as the filed forms require approval.
4. Notify Tax Agencies and Settle Taxes
Reach out to different tax authorities about your dissolution and pay any due taxes:
- The last federal and state income tax returns should be filed, but it would be indicated “final.”
- If you ever used an EIN, you file the employment tax and its last return to IRS.
- If you sell goods or services, make sure that all the sales tax obligations are paid.
For whatever reason a tax-related issue has emerged, a professional advisor would figure out a reasonable approach to it. Otherwise, issues with taxes could instigate sanctions or an audit.
5. Notify Creditors
Contact any creditors regarding your upcoming dissolution. Inform creditors when they can send any claims against members of the LLC. Although New Mexico does not require the issuance of a Notice of Dissolution, making a record of the notifications may come in handy with any future claims that the Limited Liability Company may receive.
Best Practices:
- Use certified mail so that a record of the mailing can be provided.
- Compile a list of all creditors to track their responses for accountability.
6. Wind Up Business Affairs
Once the Articles of Dissolution have been filed, go ahead with the process of winding up the business:
- Liquidate any remaining assets.
- Resolve outstanding contracts or obligations.
- Distribute any remaining assets among members according to ownership interests or the terms specified in your operating agreement.
7. Maintain Records
Organizing records of dissolving businesses based on actions taken to dissolve the firm can be helpful for future use. This may include:
- Minutes of meetings.
- Documents submitted to registered firms.
- How meetings with creditors and the tax office were conducted.
These records may be needed in the future or as evidence to be used during disputes that may arise after the dissolution. Keeping these dissolution specific-records may help you deal with any scrutiny that may arise from federal or state bodies.
Additional Considerations
Closing Business Accounts
- Ensure that you terminate any business banking and credit accounts.
- Contact your bank to inform them that your accounts have been dissolved so that future payments are unauthorized.
Cancelling Business Licenses and Permits
You should dissolve your business, which you can do by canceling its LLC status, business licenses, permits, or registrations issued by the state or local authorities must also be canceled.
Post-Dissolution Obligations
Be aware of potential post-dissolution claims. Creditors typically have a limited period to bring claims against the LLC after dissolution. Properly notifying creditors reduces the likelihood of unexpected liabilities.
Conclusion
This period includes attention to thorough litigation drafting as well as notification to all the potential debtors. Notice that those two steps should be treated with caution since they are crucial towards dissolving your New Mexico LLC Amending and changing the Operating Agreement, obtaining approval via vote, filling all the papers required, repaying provided loans, and notifying the creditors are further steps to be undertaken to ensure dissolution with minimum interference legally.
If applicable, gather documentation and contact an attorney or a professional in business. This will help you in completing this work orderly and precise.
Need to contact EasyFiling? If there is any content that you want to remove completely from your work or any issues that you want to raise with the company you may contact EasyFiling without any hesitation.
Book a free consultation today with Easyfiling to dissolve an LLC in New Mexico.
Nabin Adhikari
