It is relatively easy to set up a limited liability company (LLC) in South Carolina. After an LLC has served its purpose, or if you created an LLC for a start-up that never materialized, you might wish to dissolve the LLC.
A South Carolina business attorney can provide legal advice on the steps you need to take. When dissolving an LLC in South Carolina, watch out for these 4 things.
One of the worst ways to dissolve an LLC in South Carolina is to do nothing and hope that the business entity will simply fade away on its own. Failing to fulfill your legal obligations of filing reports, preparing tax documents, sending collected sales tax to the appropriate authorities, or other missteps could land you in hot water.
Dissolving an LLC Is Different from Winding up the Business
Dissolving an LLC in the state of South Carolina means that you go through a formal process called “dissolution” in which you end the legal existence of the business entity. Voluntarily dissolving an LLC of which you are a member is preferable to a court ordering an involuntary dissolution or having the state issue an involuntary administrative dissolution because the LLC did not fulfill legal obligations like paying taxes.
When you complete a voluntary dissolution, your personal assets can be protected from creditors of the LLC. You might not have any such protection with an involuntary dissolution.
The operating agreement of the LLC will probably provide guidance on how to dissolve the company. You will want to make sure that you not only follow all procedural dissolution requirements contained in the operating agreement, but that you also create proof that you did so, like calling a formal meeting, providing proper notice of the meeting and the purpose for the meeting, and recording the decision of the LLC members at that meeting.
Winding up the business of the LLC involves paying valid debts, creditors including LLC members, and all outstanding taxes. After completing these payments, the LLC can then distribute its assets. South Carolina has an LLC Act that requires the payment of debts, creditors, and taxes before the distribution of assets.
Notice of the Dissolution
Because winding up the business requires you to pay debts and creditors, it would be smart to give notice to those individuals and organizations that the LLC is dissolving. Although South Carolina does not require the step, doing so can reduce your liability. Also, you can have greater peace of mind when distributing assets if you know that there are unlikely to be claims on those assets in the future. A best practice is to send written notice directly to known claimants and to publish notice of the dissolution in the appropriate legal newspaper.
Filings with the Secretary of State
South Carolina does not require people to file articles of termination of LLCs, but doing so can provide you protection in a number of scenarios. For example, if someone decides to “hijack” your company identity and do business in your LLC’s name, having articles of termination filed with the Secretary of State can shield you from liability.
A South Carolina business attorney can help you comply with state requirements and take the additional steps that can protect you as a member of a dissolving LLC. For legal help with your case get in touch with our office today, we offer a free consultation.