How To Dissolve A NY Corporation That Never Did Business
I wanted to start a company in the summer of 2011. I was really excited and went straight ahead with the administrative stuff: I setup my EIN (Employer Identification Number) and wanted to incorporate in NY, since I was living there. After Googling, it seemed really confusing and complicated so I talked with some friends who had started companies. They told me that they used one of those incorporation services and that it was easy and I should use one. I found BizFilings, which seemed fine. I don’t remember how much it cost me, but everything was online and I didn’t need to talk to anyone, which always seems like a plus.
I signed up with BizFilings: they incorporated my company in New York State and they were setup as my registered agent. A registered agent is a person or company who receives all of the official legal and tax notices (mail) you get from the government and sends them to you. You pay the registered agent an annual fee to handle these notices and remind you to stay compliant with the state’s laws. (If you do business in multiple states it is likely that you need to sign up as a foreign corporation in each state with a registered agent. But that topic is for another post.)
Not to get too much into compliance but the basics for being compliant as an entity registered as a corporation of a state is that you have to file the annual report (which consists of the stock information, list of officers and your current address), and file and pay any taxes that you owe. There is nothing else.
If you don’t do these things, the state sends a letter to your registered agent and the registered agent forwards you the letter.
Fast forward a month or so to September 2011 and I couldn’t move forward with the business for personal reasons. I called Bizfilings and asked them to dissolve my company. They charged me $500 and emailed me some forms that I needed to sign and send back. I ended up forgetting and never sent the dissolution forms back to BizFilings. My bad.
In January 2016, I received a call from BizFilings. They told me that they had just done an audit of their files and realized that my company was never dissolved. They sent me a bill for four years of registered agent service plus another dissolution fee. I was very surprised by this, since they had my phone number and email address but never informed me of the four or more annual compliance notices from New York State. I asked them to remove the registered agent charges since they did not actually do their job as my registered agent and to remove the dissolution fee. I would just dissolve the corporation myself.
For me, it took nine months and $169 plus post office expenses to dissolve my New York Corporation that I never actually conducted business through. Here I am listing out the steps and what I learned so that you can hopefully dissolve your NY Corporation in much less time and for less than $100. It is really only two easy steps but, as with all government forms and filings there is some need to know info. And you will not find it on the internet in plain english.
How to Dissolve a NY Corporation That Never Conducted Business
1 Fill out Form CT-4, Mark It Final and Send It to NYS Department of Tax and Finance.
The CT-4 form is the short form tax return. Since my company was technically “doing business” for four plus years, it owed tax returns for each calendar year (even though we didn’t make any money).
Call the New York State Department of Tax and Finance at 518-485-6027 to find out how much you owe.
Initially, they told me that I owed $1,536, but I could confirm it with another person in the Tax and Finance Department at 518-485-0384. I called the number and after explaining the situation that the corporation had never actually conducted business, they reduced the cost to $12 plus a penalty and interest, which came to $34. Not too bad...I suspect BizFilings would not have gotten my fee reduced.
For the CT-4 form, I only filled out the header, marked the checkbox final, signed as the authorized person and sent it in with a check for $34. I didn’t fill in anything else.
The New York State Department of Tax and Finance told me it would take four to six weeks to process the tax return and they would send me the Consent to Dissolve document. For whatever reason it took eleven weeks. I called every three weeks to check in on the status to make sure it was moving along.
2 Fax Dissolution Paperwork With Credit Card Authorization Form 1515 to 518-474-1418.
This is the key step, which I actually messed up on multiple areas.
I received the Consent to Dissolve in the mail, which expired in a little less than three months. I was busy and traveling but I did send it back and it arrived 10 days before the expiration date.
I called 10 days after the expiration of the Consent to Dissolve to check in. They said that the dissolution was rejected because it was processed after the expiration date. It does not matter the date the documents are received by the state. The only thing that matters is the processing date, which can be weeks later than received.
They explained that the only way to make sure that my dissolution request gets processed right away is to fax it and pay a $25 processing fee for 24 hour expedited service.
To dissolve the NYS Corporation, first put together the documents: NYS Consent to Dissolve (you received this in the mail), prepare a Certificate of Dissolution and fill out the Credit Card Authorization Form 1515.
The only thing you need to know about the Certificate of Dissolution is in the FIFTH section the title of the signer must be Director. I wrote owner twice and it was rejected both times. The reason I was given was that it was not signed by a director. The first time I thought that I had forgotten to sign the document. The second time I knew I had signed it and asked who was supposed to sign it, since it was a corporation that never existed and I was the only person on the documents. They told me that the title of the signer must be written as director no matter what the actual title is/was.
For the Credit Card Authorization Form 1515, I checked FILING OF DOCUMENTS AND CERTIFICATES and Expedited Service-24 hours-$25. Then I added $60 in the first line for the dissolution fee in the FILING OF DOCUMENTS section and $25 in the second line. Then I put $85.00 in the TOTAL Total Amount Due line and filled out the credit card info. I faxed the Consent to Dissolve, Certificate of Dissolution and the Credit Card Authorization form and it was processed right away. I received the confirmation within a week.
What I learned in my nine month frustrating path to dissolving a NY Corporation that never existed:
1- Ask and you shall receive.
Ok, so this may not always be true, but the saying “the loudest mouth gets fed” is often the case. If I had just accepted what BizFilings told me than I would have paid over $2,000 in fees to BizFilings and penalties to NYS and would have had to put in essentially the same amount of work into filling out papers.
Also, after explaining the situation to NYS they reduced my penalties from $1,300+ to $34.
It is definitely worth it to ask. The worst that can happen is they say no.
2 - Pick up the phone.
If you conduct business in one state only it should not be too difficult to manage your state filings. Just pick up the phone and call the state. Ask questions about what you need to do, when things are due and always get the representative’s name and ID number. Take notes and call back to check in until you have gotten the hang of it. That is the best way to make sure that you are compliant.
3 - Don’t set up a company until you really need to.
In retrospect, it would have been way easier if I had never set up the NYS Corporation. I didn’t have any clients, investment or hire any people: just a business idea. There was no urgent need to set up a company.
I hope my story helps you to understand that starting and managing a business has more administrative burden than we like to think. I am not a lawyer or CPA, but I can say that you should just try your best to not make mistakes. And if you do, you may need to pay a little extra. Usually it isn’t the end of the world, though.