Not every limited liability company (LLC) lasts forever. In fact, many LLCs in South Carolina are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of South Carolina has a specific process that all LLCs must go through before they are considered to be officially dissolved.
Which steps are involved in the South Carolina LLC dissolution process? Are there different processes for businesses based in South Carolina and those expanded from other states? When do you need to dissolve your LLC? We’ll answer all of these questions and more in this article.
How Do You Dissolve a South Carolina LLC?
When closing a business registered as an LLC in the state of South Carolina, you’ll need to take care to dissolve your business exactly as the state outlines. The most important part of this process is filing the correct paperwork with the relevant legal entities, but this is far from the only vital step.
In addition to filing documentation of your South Carolina LLC dissolution, you will need to liquidate the assets of your business, notify all individuals and business entities that have an interest in your company, and resolve any outstanding liabilities with vendors, suppliers, or clients.
There are potentially severe penalties for failing to comply with the South Carolina LLC dissolution process, and you as a business owner could be personally responsible for your LLC’s liabilities and debts. Therefore, it’s extremely important that you complete each step outlined in this guide to ensure an effective and compliant dissolution.
As for the question of when you should dissolve your LLC, you should do this as soon as you’re certain you will no longer conduct business through this entity. This gives you an opportunity to close up shop with the knowledge that you’re not transacting any business after you start the dissolution process.
Dissolution for Domestic South Carolina LLCs
Is your LLC based in South Carolina, and registered as a domestic entity in this state? If so, you’ll start your dissolution process with a document known as the Articles of Termination. This form will include some crucial information about your business, so you should fill it out carefully and accurately.
Among the info you’ll need to complete this form is the official business name of your LLC, the date your LLC’s Articles of Organization were filed, the effective date of your dissolution, an indication that the company has wound up its affairs, the date, and the signature, printed name, and title of your LLC’s representative.
Once you’ve finished filling out this form, you will submit it to the Secretary of State by mail, in person, or online, and you will also need to pay your $10 filing fee. If you file online or in person, your filing will be processed by the next business day, while mailed filings take around two business days from the date of receipt.
But what does this process look like for a business that was formed outside the state and then expanded to South Carolina?
Dissolution for Foreign LLCs in South Carolina
If you operate a foreign LLC in the state of South Carolina, the dissolution process looks quite different than it does for domestic entities. In fact, it’s actually technically called a cancellation rather than a dissolution.
To dissolve a foreign LLC in this state, you’ll first complete the Foreign Limited Liability Company Certificate of Cancellation of Authority to Transact Business in South Carolina document. Much of the information for this form is the same as the info provided for the Articles of Termination, but there are some differences for the foreign version.
This form requires your LLC’s official business name, the date your LLC received its qualification to transact business in South Carolina, an address for potential future service of process deliveries, the date, and your signature, printed name, and title.
When you’re done filling out this form, you will submit two copies to the Secretary of State, along with your $10 filing fee. You can submit this filing by mail, in person, or online. Online and in-person filings are processed by the next business days, while mailed filings usually take two business days.
Involuntary Dissolutions in South Carolina
We should also discuss the potential for an LLC to be involuntarily dissolved by the state. There are several reasons this could happen, and most of them revolve around significant mistakes made by the LLC’s ownership group.
For instance, South Carolina could involuntarily dissolve your LLC if you fail to pay any fees, taxes, or penalties within 60 days of the due date.
It’s obviously never advisable to operate your LLC in a way that leads to the state dissolving it against your will. However, South Carolina’s penalties for reinstating an administratively dissolved LLC aren’t terribly punitive. For example, you will need to fix the issues that caused your dissolution, obtain a tax clearance from the Department of Revenue, and pay any relevant taxes and/or fines.
Still, if you keep operating your business after the state involuntarily dissolves it, you could open yourself up to all sorts of legal issues due to the continued operation of a non-compliant entity. In general, you should be as careful as possible when it comes to following the rules and regulations in this state.
It’s not that the process for dissolving or withdrawing your LLC in South Carolina is terribly difficult. However, it is a process that you need to take great care to complete in a compliant fashion, or you could expose your business to a wide variety of potential legal complications and financial penalties. Trust us when we say it’s much smarter and easier to simply follow the directions with care to avoid any issues.
Do you need more information about operating an LLC in South Carolina? Take a look at the following resources: