How to Dissolve an LLC in South Carolina? (Simple Guide)
When business owners finally decide to voluntarily dissolve an LLC in South Carolina, certain steps need to be accomplished before formally terminating the business.
Together with our team of legal advisors, we researched and compiled this comprehensive guide on how you could legally dissolve an LLC in South Carolina.
- To legally dissolve an LLC in South Carolina, follow the operating agreement and state requirements, including filing necessary legal documents with the Secretary of State.
- File Articles or Certificates of Dissolution with the South Carolina Secretary of State, including a $10 filing fee.
- The business failure rate within the first year in South Carolina is 22.2%, highlighting the importance of a structured dissolution process.
- From personal experience, the dissolution process, while complex, is essential for legally closing a business and protecting oneself from future liabilities.
6 Steps To Dissolving an LLC in South Carolina
The steps to dissolve your South Carolina LLC include the following:
Step 1: Vote to Dissolve the LLC
The first step is usually for the LLC members to vote on the dissolution.
In our case, the requirements for this vote were outlined in our LLC's operating agreement. All members voted and agreed on the dissolution of the company.
In the absence of one, South Carolina law does not contain explicit conditions for voluntary dissolution. It is advisable to consult an attorney if your LLC lacks dissolution provisions .
Step 2: Notify Creditors About Your LLC's Dissolution
South Carolina LLC members must notify creditors, loan associations, and banks about the company’s intent to dissolve.
During our dissolution, we sent written notice to all third parties. This way, interested parties were able to claim with the LLC and members could settle obligations.
Notably, considering the business failure rate within 1 year in South Carolina stands at 22.2%, as per the U.S. Bureau of Labor Statistics, this step is critical for preempting any complications arising from unresolved financial obligations .
The LLC must appoint a representative to keep all accounts payable records as proof that the company has settled its obligations.
"In South Carolina, while filing articles of termination for LLCs is not mandatory, it can offer you protection in various situations. For instance, if an individual attempts to usurp your company's identity and conducts business under the name of your LLC, having filed articles of termination with the Secretary of State can safeguard you against liability."
-Jon Morgan, Co-Founder & Chief-Editor of Venture Smarter
Step 3: File Final Tax Returns and Obtain Tax Clearance
According to state laws, a South Carolina LLC is required to close business tax accounts by settling all tax obligations, including sales tax, unemployment insurance tax, and employee withholding tax.
For us, this meant that the necessary paperwork couldn't be filed with the South Carolina Secretary of State until the LLC had received clearance from the South Carolina Department of Revenue.
The South Carolina Department will only issue a clearance if:
- All LLC taxes owed have been paid in full, and
- There are no liens against the LLC.
Step 4: File Articles or Certificate of Dissolution
The next step in your LLC dissolution process is to file Articles of Dissolution with the South Carolina Secretary of State to formally declare the dissolution of your LLC. You can file the document along with a $10 filing fee in person or by mail.
In our case, we filed the documents in person and they were processed within two business days.
This action was particularly meaningful given that between March 2021 and March 2022, according to the U.S. Small Business Economic Profile, small businesses accounted for 12,344 closings in the state, highlighting the importance of formally concluding business affairs to prevent any future liabilities .
When you file Articles of Termination, you'll need to include the following information:
- The business name and mailing address of your LLC
- The effective date of dissolution
- The date that you filed your Articles of Organization
- A statement that the LLC is in the process of being dissolved
- The name and signature of an authorized individual
After filing your dissolution articles, be sure to notify all affected parties (e.g., customers, suppliers, creditors, and employees) of the dissolution.
Make sure to obtain a certified copy of your Articles of Termination because you'll need it to close out your LLC's bank account and finalize other administrative tasks.
Step 5: Distribute Assets
The LLC's operating agreement should outline how assets are to be distributed among members in the event of dissolution.
If the operating agreement does not specify this, or if there is no operating agreement, then South Carolina state law will provide default rules.
In our case, after debts and obligations were paid, the remaining assets were distributed to the LLC members according to their ownership percentages.
For example, if a member owns 50% of the LLC, they would typically receive 50% of the remaining assets.
Step 6: Close All Accounts and Cancel Licenses and Permits
Close any business bank accounts, including checking, savings, and credit accounts. Before closing these accounts, ensure all outstanding checks have cleared and all automatic payments have been redirected or canceled.
Pay off and close any business credit card accounts. This helps prevent unauthorized use and additional charges after the business is dissolved.
During our business closure, we also informed the relevant local and state licensing authorities of our LLC's dissolution and canceled any business licenses. This included our general business license, trade-specific license, and professional license.
How Much Does It Cost to Dissolve an LLC in South Carolina?
It costs $10 to dissolve an LLC in South Carolina. It covers filing the Articles of Termination with the South Carolina Secretary of State. There are additional fees and costs to pay if you hire a professional service to help you through this process.
How Long Does it Take To Dissolve an LLC in South Carolina?
It takes an average of 2 business days to dissolve an LLC in South Carolina. This is the average time the Secretary of State takes to process your Articles of Dissolution.
Do You File Taxes for a Dissolved LLC in South Carolina?
If you have standing tax duties, you will need to file taxes for a dissolved LLC in South Carolina. Failing to file the extra termination papers means you'll be liable for annual report costs and minimal company taxes indefinitely.
Can Someone Use My LLC Name in South Carolina After Dissolution?
If voluntarily dissolved, someone can use your LLC name in South Carolina 120 days after the effective date of dissolution. However, if the company is administratively terminated, the business name will be available after two years.