How to Close or Dissolve a Business in South Carolina

To dissolve a business in South Carolina, you need to get the owners’ formal approval, file the right dissolution document with the Secretary of State, notify creditors, close out state and federal tax accounts, cancel every permit and license tied to the business, and distribute whatever is left to the owners. Skipping any of those steps can leave you personally exposed to tax assessments, penalties, and lawsuits long after you’ve stopped operating. The exact paperwork depends on whether you run a corporation, an LLC, or a partnership, but the sequence is the same.

Get the Required Owner Approval

Nothing else can happen until the owners have formally agreed to close the business.

For a corporation, the board of directors adopts a resolution recommending dissolution and puts it to the shareholders. Approval requires at least two-thirds of all shares entitled to vote, not just a majority of shares that show up.¹ The articles of incorporation can set a different threshold, but never lower than a majority of all shares.

For an LLC, the operating agreement controls. If it names specific dissolution events or a voting threshold, follow those. When the agreement is silent, the South Carolina Uniform Limited Liability Company Act steps in and lists the events that trigger dissolution, including member consent at the percentage the agreement specifies, an event making the business unlawful, and judicial dissolution ordered because of member disputes or oppressive conduct.²

Partnerships follow their partnership agreement. Without one, general partnerships dissolve under the South Carolina Uniform Partnership Act, which requires partner agreement to dissolve, notice to creditors, payment of debts, and distribution of what’s left.³

File the Correct Document With the Secretary of State

Each entity type files something different, and the name matters.

Corporations file Articles of Dissolution. The filing must include the corporation’s name, the names and addresses of all directors and officers, the date dissolution was authorized, and the vote totals showing the required approval was reached. The fee is $10.¹⁴
LLCs file Articles of Termination. The fee is $10.⁵
Limited partnerships file a certificate of cancellation listing the partnership’s name, the date the original certificate of limited partnership was filed, the reason for cancellation, and the effective date.⁶
Limited liability partnerships must obtain a certificate of cancellation from the Secretary of State, which surrenders their authority and revokes the authority of the registered agent.⁷
General partnerships do not file dissolution documents with the Secretary of State. If the partnership used a trade name, file a notice of abandonment with the county register of deeds.

Filings can be submitted through the Secretary of State’s Business Entities Online portal, which typically processes them within a few business days. Mailed applications take longer. If lawsuits are pending against the business, the filing should indicate how those proceedings will be handled. Once the state accepts the dissolution, the entity keeps enough legal existence to wind up its affairs but cannot start new business.

If your business is registered in other states, file withdrawal notices in each one. Otherwise those states will keep expecting annual reports and fees.

Notify Creditors and Cut Off Future Claims

South Carolina treats known and unknown creditors differently.

For known creditors, a dissolving corporation must send written notice describing what information the claim needs to include, providing a mailing address for claims, setting a deadline of at least 120 days from the notice date, and stating that late claims will be barred.¹ If you reject a claim, do it in writing. The creditor then has 90 days from the rejection to sue, or the claim is barred.

For unknown creditors, corporations may publish a dissolution notice in a newspaper of general circulation in the county where the principal office sits. The notice describes how to submit a claim and states that claims are barred unless a proceeding is started within five years of publication.¹ Publishing is optional, but it starts the clock. Without it, a stranger with a claim can surface much later.

These rules are written for corporations, but LLCs and partnerships should follow the same practices to protect against post-dissolution surprises.

Close State and Federal Tax Accounts

Tax cleanup is where South Carolina closures most often go wrong.

State

The South Carolina Department of Revenue expects final returns and payment of all outstanding liabilities, including corporate income tax, sales and use tax, and withholding tax. Close your SCDOR accounts online through MyDORWAY or by submitting Form C-278 (Account Closing Form).⁸ Mark each final return clearly as the last for that account so the SCDOR stops expecting future filings. Employers also need to close the unemployment tax account with the South Carolina Department of Employment and Workforce by filing a final quarterly wage report.

Tax clearance is not required before filing dissolution documents, but requesting a Certificate of Compliance from the SCDOR using Form C-268 (with a $60 nonrefundable fee) confirms that state tax liabilities have been satisfied. That paper is useful if questions come up years later.

Federal

File a final federal tax return and check the “Final return” box: Form 1120 for corporations, Form 1065 for partnerships and most LLCs.⁹ Employers file a final Form 941 for the quarter of the last payroll, a final Form 940 for federal unemployment tax, and issue W-2s to employees, filing them with the Social Security Administration by January 31 of the following year.¹⁰

Corporations have an extra step many owners miss: IRS Form 966 must be filed within 30 days of adopting the dissolution resolution, with a certified copy of the resolution attached. If the plan is later amended, a new Form 966 is due within 30 days of the amendment.¹¹

To close the IRS business account and cancel the EIN, send a letter to the IRS at Cincinnati, OH 45999 with the business’s legal name, EIN, address, and reason for closing. Include a copy of the EIN assignment notice if you have it. The IRS will not close the account until every required return has been filed and every tax paid.¹²

Cancel Licenses and Permits

Every license, permit, and registration attached to the business needs to be formally canceled. Anything left open can keep generating renewal fees and compliance duties.

Professional and occupational licenses for contractors, accountants, healthcare providers, and similar fields must be closed with the issuing licensing board. Regulatory permits (environmental compliance, alcohol sales, and the like) usually require a final report or surrender of the physical license. For alcohol and tobacco accounts, the SCDOR requires Form L-1278.⁸ Local business licenses issued by cities or counties need to be canceled through the local business license office. Procedures vary; some require written notice, some allow online cancellation.

Pay Debts, Then Distribute What Remains

Creditors come first. Owners come last.

For corporations, once debts are settled, shareholders receive distributions based on their ownership interests. Preferred shareholders take priority over common shareholders if the articles of incorporation say so. For LLCs, the operating agreement controls the order. When it is silent, South Carolina law requires the company to first discharge all obligations to creditors (including members who are creditors), then distribute any surplus to members based on their positive capital account balances.¹³ Partnerships distribute under the partnership agreement, generally by ownership stake.

The fair market value of anything distributed must be reported for tax purposes. Capital gains tax may apply if an owner receives more than their basis in the business.

What Happens If You Just Walk Away

Locking the doors is not dissolution, and administrative dissolution is not a substitute for doing it right.

South Carolina can administratively dissolve a corporation that fails to pay franchise taxes, file annual reports, or keep a registered agent.¹ LLCs face administrative dissolution if a required fee, tax, or penalty goes unpaid for 60 days past the due date.² But administrative dissolution does not put you through the creditor notice process and does not close your tax accounts, which is where personal exposure lives.

Under South Carolina law, officers, partners, and employees who had a duty to remit withheld income taxes or collected sales taxes can be held personally liable for the unpaid amounts. The SCDOR has 10 years from the assessment date to collect using bank account seizures and wage levies. A tax lien filed against you personally stays valid for 10 years from filing. And the assessment against the business itself counts as a timely assessment against the responsible individual, so you may not get a separate notice before collection starts.

Keep the Records

Closing the business does not mean you can shred the files. Hold onto the following:

Tax returns and supporting documents for at least three years, because the IRS generally has three years from the filing date to assess more tax. If the business reported 25 percent or less of its gross income on any return, that window extends to six years.¹⁴¹⁵
Employment tax records for at least four years after filing the fourth-quarter return for the final year.¹⁶
Payroll records (wage rates, hours worked) for at least three years under federal labor law.¹⁷
Contracts, corporate resolutions, and the dissolution documents themselves, indefinitely. Digital copies stored securely are fine, and they are what you’ll reach for if a dispute surfaces or someone questions whether the business was properly closed.

1
South Carolina Legislature. South Carolina Code Title 33 Chapter 14 – Dissolution
2
South Carolina Legislature. South Carolina Code Title 33 Chapter 44 – Uniform Limited Liability Company Act of 1996
3
South Carolina Legislature. South Carolina Code Title 33 Chapter 41 – Uniform Partnership Act
4
South Carolina Legislature. South Carolina Code Title 33 Chapter 1 – General Provisions
5
South Carolina Legislature. South Carolina Code 33-44-1204 – Fees
6
South Carolina Legislature. South Carolina Code Title 33 Chapter 42 – Uniform Limited Partnership Act
7
South Carolina Legislature. South Carolina Code 33-41-1190 – Foreign Limited Liability Partnership Cancellation of Registration
8
South Carolina Business One Stop. Closing
9
Internal Revenue Service. Form 1120 U.S. Corporation Income Tax Return
10
Internal Revenue Service. Employment Tax Due Dates
11
Internal Revenue Service. Form 966 Corporate Dissolution or Liquidation
12
Internal Revenue Service. Closing a Business
13
South Carolina Legislature. South Carolina Code 33-44-806 – Distribution of Assets in Winding Up Limited Liability Companys Business
14
Internal Revenue Service. How Long Should I Keep Records
15
Internal Revenue Service. Time IRS Can Assess Tax
16
Internal Revenue Service. Employment Tax Recordkeeping
17
U.S. Department of Labor. Fact Sheet 21 – Recordkeeping Requirements Under the Fair Labor Standards Act