There are many reasons why an owner of a South Carolina business may need to shut down. It could be due to bankruptcy, beginning a new business, retirement, or other important reasons. Whatever the reason, you need to take the steps to dissolve your South Carolina business properly. If not, it could cause headaches, extra work, and money down the road. You could suffer adverse tax implications, fines, financial penalties, negative impacts on your credit rating, and an inability to get future business loans.
The following guide walks you through what needs to be done to dissolve your South Carolina limited liability company (LLC) or corporation. If you want to form a business entity in South Carolina, our experts can show you the way. With our fast and easy South Carolina LLC Formation Service or our Corporation Formation Service, you can easily create your company, get it legally filed with the South Carolina Secretary of State’s office, and be on your way to success.
The first thing to do is gather up your company’s governing documents and review what the rules require for termination of your business. This will either be an operating agreement (LLC), bylaws (corporation), or a partnership agreement. If the documents were created properly, there will be a list of actions that you take to shut down the business legally and in the eyes of the state. There may be a need to hold meetings of the owners and take votes, for example. It’s important that all your business creation documents and operating documents are securely filed and easily accessible, just for this very reason.
Every company has some value, and the first step in the dissolution process is to establish what your company is worth. Make note of anything that has value, such as real estate, inventory, assets, and cash reserves. Also make note of any liabilities associated with those assets. Some of the assets may have loans or debt attached to them. Compile and summarize any current and open contracts with third parties, including employment contracts, inventory purchase agreements, union agreements, and sales agreements.
Using our Worry-Free Compliance Service and dashboard, you can keep your important documents in one place and easily accessible 24/7.
Create a detailed accounting of all your South Carolina business debts. Before you close down your business, you have to resolve any outstanding debts or loans. If not, they could come back to haunt you, and you might be held personally liable for the loans. It could also unnecessarily pull you and your company into expensive and time-consuming lawsuits.
To dissolve your business registration with South Carolina, you have to file the appropriate form for your business type. You can dissolve a corporation by filing Articles of Dissolution with the Secretary of State’s office. For an LLC, you must file Articles of Termination. You can file these documents online or by mail. There is also a small fee requirement with the filing of the dissolution documents.
If your company stops doing business in South Carolina and fails to file the appropriate yearly reports and tax documents, your company will eventually suffer an administrative dissolution. But dissolving your company this way can cause extra hardship and work down the road.
Your operating documents will dictate the steps that need to happen before you can dissolve your South Carolina business. By following these steps, you can officially and legally dissolve the business. If these documents don’t provide a roadmap as to how to dissolve a business in South Carolina, then you must follow the steps outlined by the state regulators. Regardless of what your operating documents say, however, you will need to file the appropriate dissolution documents with the state.
Our Operating Agreement Template can help you create an operating document for your LLC that addresses your business’s needs and includes proper dissolution instructions.
If you don’t cancel your business’s permits, licenses, and registrations, it could cause extra work and fees later on. Your permits, licenses, and registrations aren’t automatically cancelled when you file your dissolution documents. Some permits and licenses automatically renew every year, charging you extra fees. Make sure to do research on which licenses, permits, and registrations you need to specifically cancel and which can merely lapse.
Before filing your dissolution documents, wrap up all your company’s legal, contractual, and financial obligations. When you do this, it protects you from future lawsuits or unexpected financial obligations. Follow all employment and labor laws, both state and federal. Prevent wage claims by paying your employees their last wages in full and on time.
Don’t forget to file all the final local, state, and federal tax returns. Close your account with the South Carolina Department of Employment and Workforce. Close your account with the South Carolina Department of Revenue as well as the IRS. This involves sending them a letter giving them the reasons that you want the business account closed. Once you file your final federal tax return, be sure to cancel your employee identification number (EIN).
The last step is to file the dissolution document with the South Carolina Secretary of State. For an LLC, you file Articles of Termination. For corporations, you file Articles of Dissolution. Keep and maintain all the official documents associated with your business, including the dissolution documents, for at least seven years.
Let us help you with your South Carolina business needs. We have the tools to help you prepare your company’s voluntary dissolution, but can also help you form and run your business as smoothly as possible. Let us save you time so you can focus on the more important things.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
South Carolina Business Resources
Business Dissolution by State