Steps to Dissolve Your South Dakota Business
- Establish a valuation of your South Dakota business
- Compile a full account of your South Dakota business’s debts
- Identify South Dakota’s official dissolution document
- Follow instructions in your South Dakota business’s operating document
- Cancel your South Dakota business’s permits, licenses, and registrations
- Wrap up your South Dakota business’s legal and financial obligations
- File Articles of Termination or Articles of Dissolution for your South Dakota business
If you have decided to shut down your South Dakota business, it doesn’t have to be a complicated task. There are many reasons people close down their businesses. Some business owners retire. Sometimes, businesses have to declare bankruptcy due to lack of sales. Although it may seem complicated at first, filing the appropriate paperwork with the South Dakota Secretary of State is fairly simple. But that is just one step in the process. You also have to shut down and complete many other tasks to prevent future issues for yourself. If not done properly, you could face tax obligations, fines, and lawsuits. Most importantly, your credit score could be negatively affected. This guide will walk you through the steps to dissolve your South Dakota limited liability company (LLC) or corporation.
But if you’re looking to create a South Dakota business, our fast and easy South Dakota LLC Formation Service or our Corporation Formation Service is the best place to start. You can start off your business properly and legally, with all the documents filed correctly.
Before dissolving your South Dakota business
Your business’s governing documents typically outline rules to follow and tasks to complete when you want to dissolve your business. This will either be an operating agreement (LLC), bylaws (corporation), or a partnership agreement. You may need to hold meetings, take ownership votes on the dissolution, and record everything in the corporate meeting minute. To properly and officially close down your company, these tasks have to be done correctly.
You will also need to be sure to gather important documents related to your business, such as contracts, leases, permits, ledgers, formation documents, etc. Keeping a thorough record of all your business’s dealings from the beginning can help you prepare for whatever your business may face down the road.
Step 1: Establish a valuation of your South Dakota business
The first step to dissolution is to compile and calculate the value of all your company’s assets. Assets are anything the company has of value, such as real estate, inventory, miscellaneous property, and cash reserves. The actual value of these assets would also reflect any liabilities attached to them. If necessary, you can hire an expert to appraise the value of certain assets. You also need to know about any open contracts with third parties and other agreements. These can include sales agreements, employment contracts, and even union contracts.
If you’re using our Worry-Free Compliance Service and dashboard, your business documents are secure and available at any time with the touch of a button.
Step 2: Compile a full account of your South Dakota business’s debts
To securely shut down your business, first resolve the company’s debts. This will give you a clean slate with no outstanding issues. If you don’t resolve your debts, this could haunt you well into the future, affecting your credit rating and potentially leading to lawsuits.
Step 3: Identify South Dakota’s official dissolution document
South Dakota law requires that you file dissolution documents with the Secretary of State. To dissolve a corporation, you file Articles of Dissolution. 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. It will take approximately 3 to 5 business days to process the dissolution. However, you can pay an extra fee for fast service.
If you do nothing, eventually South Dakota will terminate your right to operate your business in the state. A business entity can be involuntarily dissolved for several reasons:
- Failure to file the required annual reports during the specified time frame
- Failure to keep a valid South Dakota Registered Agent on file with the Secretary of State’s office
- Required payments have been declined or rejected by the bank and filing fees remain unpaid
If this does happen, you can file for reinstatement of your business. However, it will cost an extra filing fee, above and beyond what you paid when you initially started your business.
Step 4: Follow instructions in your South Dakota business’s operating document
The documents that control the running and management of your business will detail what internal steps need to happen to dissolve your company. You have to accomplish each of these tasks to legally shut down your business.
Our Operating Agreement Template can help you create your business with a guiding document that addresses your business’s individual needs and helps you prepare for important matters that arise in the future, including dissolution.
Step 5: Cancel your South Dakota business’s permits, licenses, and registrations
You must also cancel your business’s permits, licenses, and registrations. Make sure to do research on which licenses, permits, and registrations require cancellation and which can merely lapse. If you don’t cancel one, it could automatically renew and cost you extra money and time in the future.
Step 6: Wrap up your South Dakota business’s legal and financial obligations
To prevent any future harm or trouble, wrap up all of the outstanding legal, contractual, and financial obligations. Follow all employment and labor laws, both state and federal. Make sure to pay every employee their due wages. File your final tax returns with the local, state, and federal tax offices, and cancel the business’s employee identification number (EIN). Wrapping everything up will prevent any ongoing litigation or financial obligations.
Step 7: File Articles of Termination or Articles of Dissolution for your South Dakota business
The last step is to file the dissolution document with the South Dakota Secretary of State. For an LLC, you file Articles of Termination. For corporations, you file Articles of Dissolution. Don’t forget to keep and maintain all of your company’s important files for at least 7 years.
We’re here to help you with your South Dakota business’s needs
We can help you with your South Dakota business’s needs, and help you stay organized and prepared for whatever your company faces, including voluntary dissolution of the company. Rely on our services to help you stay compliant with South Dakota law throughout the life of your business.
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.
- How do I dissolve a business in South Dakota?
All you have to do is follow the simple steps and file the appropriate documents with the Secretary of State’s office. Resolve all outstanding obligations, debts, open contracts, and employment issues. Don’t forget to file your final tax returns and cancel all outstanding permits, licenses, and registrations.
- How much does it cost to dissolve an LLC in South Dakota?
To file termination documents, you need to file a specific form and a small filing fee. You can file online with payment via a credit or debit card, or by mail with a check or money order.
- How long does it take to dissolve an LLC in South Dakota?
The South Dakota Secretary of State’s office usually takes 3 to 5 business days to process your Articles of Termination. However, for an extra fee, you can have the filing expedited and completed sooner.
- How do I dissolve a nonprofit organization in South Dakota?
You can dissolve a nonprofit organization by filing Articles of Dissolution.