Not every limited liability company (LLC) lasts forever. In fact, many LLCs in South Dakota are only intended to operate for a designated time period. Whatever your reasoning for closing up shop, the state of South Dakota 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 Dakota LLC dissolution process? Are there different processes for businesses based in South Dakota 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 Dakota LLC?
When closing a business registered as an LLC in the state of South Dakota, 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 Dakota 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 Dakota 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 Dakota LLCs
Is your LLC based in South Dakota, 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, your company’s South Dakota business ID number, the effective date of your dissolution, an acknowledgment that your LLC has wound up its affairs, the date, and your signature, printed name, and title.
When you’ve finished filling out the form, you can submit it in duplicate to the Secretary of State by mail or in person (the state allows some business filings to be completed online, but not dissolutions), along with your $10 filing fee. It typically takes the state 3-5 business days to process your filing, although you can expedite your order for $50. It is odd though that the state does not say how much this speeds up your order, simply that expedited orders are completed “sooner than the normal course of business.”
But what does this process look like for a business that was formed outside the state and then expanded to South Dakota?
Involuntary Dissolutions in South Dakota
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 Dakota could involuntarily dissolve your LLC if you fail to pay any fees, taxes, or fines assessed by the state within 60 days of the due date, or fail to file an annual report within 60 days.
It’s obviously never advisable to operate your LLC in a way that leads to the state dissolving it against your will. However, the penalties can be even steeper than you might realize. For example, you will need to fix the issues that caused your administrative dissolution, file an application for reinstatement with the Secretary of State, pay any relevant fees or fines and their associated late fees, and pay a $150 reinstatement fee.
In addition, 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 Dakota 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 Dakota? Take a look at the following resources: