There are dozens of reasons why you may want to stop using your limited liability company in South Carolina. Unfortunately, you can not just walk away from the business. Even if forming your South Carolina LLC was an easy and straight-forward process, closing it could require a few more steps. There are several legal processes you need to go through to wrap up any loose ends and officially dissolve your LLC.
This brief guide will explain the steps you need to take in South Carolina when dissolving your LLC with the South Carolina Secretary of State. However, since you can run into legal problems if you don’t follow the correct procedure for your LLC dissolution, it is best to consult a professional for assistance.
The dissolution of an LLC ends its legal status and ability to do business in South Carolina. However, it also ends your obligations when it comes to taxes and annual filings for the business. Dissolving an LLC can happen in several ways, and the procedure differs depending on the reason for dissolution. There are two main categories: voluntary dissolution or involuntary dissolution.
However, regardless of whether the dissolution of your business is voluntary or involuntary, you will still still need to take action to protect yourself.
In South Carolina, there are three kinds of LLC business dissolutions: Administrative, judicial, and voluntary.
An administrative dissolution is when the State of South Carolina dissolves an LLC for a violation. According to SC Code § 33-44-809, an LLC can fall under administrative dissolution when the:
A judicial dissolution is when the courts determine that an activity of the LLC is so egregious that it must be dissolved. This is often referred to as a corporate death penalty, and the guidelines for issuing a judicial dissolution are spelled out in SC Code § 33-14-300. Some of the offenses include:
The LLC decides to stop doing business. Depending on how many members (registered owners) are part of the business, the decision may require a vote.
The procedures to dissolve an LLC in South Carolina are set out in SC Code § 33-14-101. This section will go over the steps that you need to take when you choose a voluntary dissolution of your South Carolina LLC.
A vote is sometimes, but not always, needed to dissolve an LLC in South Carolina. Obviously, single-member LLCs will not require a vote, but even some LLCs with multiple members may not require one either. The most common reason a vote may not be necessary in a multi-member LLC is because a pre-agreed dissolution trigger written into the LLC’s operating agreement was activated.
If a vote is necessary, the majority of the members must vote for the dissolution.
Most LLCs have operating agreements that set out the rules the members agreed to when running a particular LLC. Many operating agreements also discuss when and how the LLC can be dissolved and what actions should take place regarding debts, closing business activities, the division of LLC assets, and so on.
In the state of South Carolina, a multi-member LLC that does not have an operating agreement, one of the members needs to seek a judicial decree before dissolving the business.
After a majority of members vote to dissolve the LLC, the LLC members need to start settling their business affairs. These may include:
Although an LLC may shield the members’ personal assets from the business’s creditors, the LLC is still responsible for trying to settle any outstanding debts. In South Carolina, an LLC does not need to inform all creditors that they are shutting down. However, choosing to do so may reduce claims from creditors in the future, and it is a good idea to prevent legal problems.
At this point in the process, your LLC may also want to liquate any existing assets. You may need these funds to complete the dissolution process.
Unlike many other states, South Carolina does not require an LLC to obtain a tax clearance certificate when voluntarily dissolving a business. However, you should consult with your financial advisor to determine if you owe any outstanding local, state, and federal taxes and settle them. You should also file a Form 966 to inform the IRS that the business is dissolving.
Depending on your situation, your LLC may also need to deal with employee taxes on any outstanding wages.
In South Carolina, some corporations file articles of dissolution, but LLCs file Articles of Termination instead. You can locate the articles of termination form on the state’s Business Filings website.
The one-page form is short and very straightforward. All you need to include is:
After filling out the form, you need to mail it to the Secretary of State along with a $10 check payable to the “Secretary of State’s Office.” Enclose a SASE to have a filed copy returned to you.
The completed form, check for $10, and SASE envelope should be sent to:
Secretary of State
Attn: Corporate Filings
1205 Pendleton Street, Suite 525 Columbia, SC 29201
You can file articles of termination using the Business Filings website.
Search for the name of your business in the search bar.
Click on the “Add Filing” button and sign into your account. You will be able to fill in the form, pay and submit the articles of termination online, and get immediate confirmation. Submitting the form online is a faster and less expensive option.
Dissolving a business that you worked so hard to start and run is tough, even if it is for a positive reason. Just know that ending your LLC isn’t the end of your entrepreneurial journey. You may choose to form a new LLC or even revoke the dissolution of the LLC within 120 days if you want to restart it! Whatever you decide, your new knowledge and experience with you will help you succeed moving forward.
Businesses are not forever, and there are many reasons why you may choose to end yours. Here are a few of the most common reasons:
Moving your business out of South Carolina.
Retirement or changing the focus of your work.
Disagreement between members of the LLC.
Merging your business with another business.
Failure to attract customers.
Even if your LLC is not conducting business, you will be responsible for filing taxes and an annual report. If you do not file, your LLC will receive a Notice for Failure to File. You will have 60 days to respond before your LLC is administratively dissolved.
The fee for dissolving an LLC in South Carolina is $10 through the mail or in person. Submitting the form online costs $5.
Yes, you can do so through the Business Filings website.
After submitting your Certificate of Termination to the South Carolina Secretary of State, it takes an average of two business days to go through. If you submit a self-addressed, stamped envelope with your filing, you will receive the Certificate of Termination in the mail.
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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