If you’ve been meaning to find out how to dissolve an LLC in South Carolina, you’ve come to the right place. This guide lists all the steps that must be followed to properly dissolve your business entity in the state. There’s a whole process to be followed, not unlike the one that you followed when setting up this business entity in the first place.
It’s a formal process since you’re effectively notifying the state that this business no longer exists. Therefore, it’s important to take care when making the filings so that everything goes smoothly. It’s not unheard of to run into problems either during the process or due to the improper dissolution of an LLC. Save yourself from that headache by taking the time to learn how to do this right the first time around.
Understanding LLC Dissolution in South Carolina
Dissolution is the formal process through which you wind up your South Carolina LLC. Much in the way the state was informed when you were setting up a new business entity, it needs to be informed that you’re shutting it down.
Some paperwork needs to be filed so that it can strike the LLC off the roll of registered entities. Before that can happen though, there will be some steps that you need to take. Collect all the relevant information that you’ll need to provide in the filing. Make sure to tie up any remaining loose ends to ensure that the process goes smoothly.
Why Dissolve an LLC in South Carolina?
As a business owner, your reason to dissolve a South Carolina LLC might be entirely different than the next person. Every business has its unique challenges. Those who can overcome them can survive whereas those that don’t will ultimately need to be shut down.
That’s going to be one of your biggest reasons to dissolve the LLC if the business isn’t making money and you feel that your time can be best spent elsewhere. It could also be that the members no longer agree on a direction for the business so they decide that it would be better for everyone to go their own ways.
How to Dissolve an LLC in South Carolina in 7 Steps
The steps highlighted in this guide on how to dissolve an LLC in South Carolina provide all the details you need to do to get this done right on the first try. There’s no use in rushing through the process. Take the time to understand all the different steps so that you’re meeting all the requirements.
1. Review Your LLC’s Operating Agreement
The operating agreement is one of the foundational documents of your business. You will have created this when the LLC was being established. It will provide a framework to follow for major decisions, such as the LLC dissolution.
Review it closely as it will mention the triggering events that will necessitate the dissolution. A triggering event is an act or an occurrence due to which it becomes necessary to dissolve the LLC. For example, an LLC may have been set up to run a freelancing business but it may need to be dissolved if the owner takes up a full-time job.
It will also provide the mode and manner in which notice is to be provided to the other member if your LLC has multiple members so that they can have their say in the dissolution process.
2. Vote to Dissolve an LLC
If yours is a multi-member limited liability company, it’s better to call a vote so that the members can get their opinions on the dissolution heard. This step will require providing them with adequate notice so that they have an opportunity to participate in the meeting.
The operating agreement will mention how much of an advance notice you’re supposed to provide them. Discuss the proposal to dissolve the LLC at the meeting. Those present will provide their opinions on it. Once the discussion concludes, call a formal vote to proceed. Once all votes are in favor, you may proceed to the next step.
3. File Articles of Dissolution
To terminate the legal existence of your South Carolina LLC, you’ll need to file the Articles of Termination with the Secretary of State. The information that you need to provide in this filing includes the LLC’s name, the date the Articles of Organization were filed, the date of dissolution of the company, and the capacity of the person signing the report.
If filing by mail, you need to include a self-addressed stamped envelope so that a filed copy may be returned to you via mail. There’s a nominal $10 filing fee for this application to be processed by the state.
4. Notify Tax Agencies and Pay the Remaining Taxes
There is a requirement in some states where LLCs need to obtain tax clearance certificates before they file for dissolution. No such requirement exists in South Carolina. This means that the dissolution process tends to go much faster here as you don’t have to wait for a tax clearance certificate to arrive.
You should, however, inform the IRS about the business being shut down. It’s a simple process that requires you to file Form 966 with the Internal Revenue Service. It’s a sort of heads-up to them about the impending dissolution of the LLC.
5. Inform Creditors and Settle Existing Debt
Unlike other states, South Carolina doesn’t require you to inform the creditors that the LLC is being dissolved. However, it would be a good idea to notify any known creditors, just so you have an opportunity to settle any existing debts or negotiate on them before the entity is wound up.
This is important to prevent headaches for you down the line because the creditors could claim in the future that you dissolved the LLC without informing them just to get out of paying those debts. Prevent that outcome and work with the creditors, including members of the LLC that may also be creditors, to figure out a solution that’s acceptable to all parties involved.
6. Wind Up Other Business Affairs
Winding up business affairs isn’t an easy task. You may not even consider certain aspects until you suddenly realize that they need to be done as well for an effective dissolution. For example, if your business has employees, you’ll need to clear all their wages and dues so that you don’t face any claims for unpaid dues in the future. It’s also good to give them advance notice that they’re going to be losing their jobs after all, so that they can find alternative employment.
Customers would have been relying on your products and services. It wouldn’t be nice if they suddenly found out they could no longer use them. Provide them with the opportunity to find alternatives so that their quality of life isn’t disturbed. You should also work with them if they have any money stuck with you so that their funds can be refunded in due course.
If you relied on suppliers, it would be best to give them a notice as well, just so they can make arrangements on their end. Sort out any payment issues with them as well before closing the company’s bank accounts.
7. Distribute Remaining Assets
Your LLC may have some assets left once it has met all its obligations, whether to the tax authorities, creditors, suppliers, employees, etc. This could be in the form of physical properties or cash. Study the operating agreement to find out how these distributions are to be made and if assets have to be disposed of, what method is to be followed.
The operating agreement is also where you’ll find the share percentages of the members. This makes it clear how much each member is supposed to receive out of the distributions that are made.
How Much Does It Cost to Dissolve an LLC in South Carolina?
There’s a $10 filing fee for the Articles of Termination that you’re required to submit to the Secretary of State to voluntarily dissolve your LLC.
Should I Dissolve My LLC Myself or Hire an LLC Dissolution Service in South Carolina?
It can be tempting to go through this entire process on your own simply because it sounds too easy. You’ll feel that you just need to check a few things off the list and you’ll be good to go. It can often be much more complicated than you think, particularly if you have been running your business for a long time and have many different loose ends that need typing up.
Business owners across the country prefer opting for a professional LLC dissolution service. They understand that by relying on professional help they can rest assured that the dissolution process will be done properly and compliantly. Nothing will slip through the cracks and come back to haunt them months or years down the line. No wonder, then, that most business owners in South Carolina also prefer using such services.
How doola Helps Simplify LLC Dissolution in South Carolina
By opting for doola’s LLC dissolution service, you can save yourself from the stress and hassle of doing everything yourself and potentially making a mistake that could end up costing you more in the future. The LLC dissolution experts at doola have helped many business owners in South Carolina compliantly dissolve their LLCs in line with the state’s requirements.
There’s very little effort required on your part. You just need to provide some basic information about the LLC that’s to be dissolved and the experts will put together all the required paperwork. They’ll also assist as the process goes through the various steps. Once the filings have been made, they’ll get in touch if any further information or documents are required.
As soon as the Secretary of State confirms to them that your LLC has been dissolved, you’ll be the first to know, enabling you to look ahead to the future without worrying about a business entity that now belongs firmly in the past.
How long does it take to dissolve an LLC in South Carolina?
LLC dissolution applications are normally processed within a week once they’re received by the Secretary of State, everything is in order, and the filing fee has been paid.
Can I dissolve my LLC without notifying my members in South Carolina?
The consent of a majority of the members is required to dissolve a South Carolina LLC, so if you have a multi-member LLC, you’ll need to call a formal vote and obtain their consent before proceeding.
Can I dissolve my LLC if I have pending lawsuits in South Carolina?
It’s possible to dissolve your LLC in South Carolina even if it has pending lawsuits. However, the legal actions will continue against the LLC even after it’s dissolved, so that’s not a way to free yourself from the lawsuits.
Can I cancel my EIN once my LLC is dissolved in South Carolina?
You don’t need to cancel your LLC’s EIN because EINs can’t be canceled. The IRS doesn’t reuse or reassign EINs since they remain unique to the entity to which they were first assigned.
What happens if I don’t properly dissolve my LLC in South Carolina?
You may be looking at problems down the road if you don’t properly dissolve your South Carolina LLC. For example, you may be made liable for the unpaid debts and taxes of the company. That’s why it’s so important to get this process done right the first time around.
Can I reopen a dissolved LLC in South Carolina?
It’s not possible to reopen a dissolved LLC in South Carolina, however, if that name hasn’t been picked up by anybody else, you’re free to set up a new South Carolina LLC under that same name.