Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
Forming a limited liability company, or LLC, in South Carolina is straightforward. If you are looking at starting a business in the state, forming an LLC is one of the best ways to go about it. In doing so, you will get limited liability protection while still having flexibility and independence.
If you aren’t sure how to form your LLC, look no further. This article will teach you everything you need to know about forming an LLC in South Carolina.
If you want help forming your LLC, ZenBusiness is our top pick for fast and affordable LLC setup, all online.
Step 1: Name Your Company
The first step for any business, including LLCs, is to name the company. You may already have a few names in mind. Try to find a name relevant to your company and easy for potential clients and customers to remember. You want to be unique but not too unique.
Naming a company seems easy enough, but there are a few guidelines you will need to keep in mind. South Carolina law states that an LLC name must:
- Include one of the following: “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, “LC”, or “L.C.”
- Be unique and distinguishable from other businesses in the state. You can check whether your name is available using this tool.
- Not be confusable with a government entity.
Once you have chosen your name, if you do not plan to file your Articles of Organization right away, it may be worth reserving the name for up to 120 days with the Secretary of State. The filing fee for this is $25.
As an additional step, check whether your chosen business name is available as a domain name. The last thing you want is to go through all the steps only to find out that the domain name isn’t available.
Step 2: Appoint a South Carolina Registered Agent
Every LLC in South Carolina is required to have a registered agent. A registered agent is an individual or business entity that accepts legal mail on your behalf. They act as the intermediary between you and the State.
You can appoint anyone to be your South Carolina registered agent, but they must have a physical street address in the state. You can even hire yourself. However, remember that the registered agent’s full name and address will be kept in public records. So, it is not always advisable to appoint yourself or a member of the LLC as the registered agent as you never know if you may be served legal papers in front of friends and family.
For this reason, many business owners opt to hire a third-party registered agent for a small yearly fee.
Step 3: File the Articles of Organization
To officially form your LLC, you must file the Articles of Organization with the South Carolina Secretary of State. You can file the Articles either online or by mail for $110.
The Articles of Organization will include the following information:
- The name and address of the LLC
- The name and address of the registered agent
- The end date of the LLC (if applicable)
- The effective date (if applicable)
- The name and address of the organizer
- The signature of the organizer
Step 4: Draft an Operating Agreement
The operating agreement is not a requirement in South Carolina. However, it is good practice to draft one up anyway, as it can help to resolve future conflicts. This agreement is not filed with the state but kept in the LLC’s archives.
There are many operating agreement templates that you can find online to get you started. This document will be the governing document for the company. To draft up the operating agreement, set up an initial meeting with all of the members to agree on the contents of the document and sign it.
Step 5: Get an Employer Identification Number
An Employer Identification Number (EIN) is not required if you are the only member of the LLC and have no employees. However, most businesses will need to obtain one. Even if you are not required to get an EIN, it is highly recommended as you will need one to open a business bank account or to hire an employee.
There is no fee to file for an EIN, and it can be done online.
Cost to Start an LLC in South Carolina
There are a few costs to consider when forming your LLC in South Carolina. When filing your Articles of Organization with the South Carolina Secretary of State, you must pay $110. You may also want to reserve the chosen name of your LLC; doing so will cost you an extra $25.
So, if you choose to reserve the name for your LLC, the minimum you should budget for is $135. But remember that this number can go up dramatically if you hire a lawyer or an LLC formation service to assist you through the process.
What To Do After Forming Your LLC in South Carolina
You are now officially the owner of a South Carolina LLC! There are still a few things to get set up but don’t worry; it isn’t rocket science!
Create an Operating Agreement
Although not required for LLCs by the State of South Carolina, it is highly recommended to create one for your business. Operating agreements are excellent for multi-member LLCs because they establish clarity around several things in the business. The operating agreement can settle disputes internally or in the courtroom.
An operating agreement is essentially the governing document of a company and can include the following information:
- The name and physical address of the LLC
- Contact info of each LLC member
- A brief summary of information that was provided in the Articles of Organization
- General operating practices and day-to-day management
- How the members divide losses and profits
- Hiring and termination practices
- Any clauses – indemnification or liability
The operating agreement can be drafted up by the members of the LLC or by a lawyer. All members of the LLC should read over and sign the document.
Hire an Accountant
Taxes can get confusing even for the best of us. Thankfully, when it comes to your business, you can hire an accountant to take care of this for you. Although hiring an accountant is not necessary, getting one on your payroll or hiring a third-party accounting service is highly advisable. When you hire an accountant, you avoid making possibly costly mistakes by overpaying taxes.
Hire an Attorney
If you’d like to ensure that you stay compliant with federal and state laws, hiring a knowledgeable business attorney is the best way. They can ensure you are on the right track and don’t stray from the law. They can even advise you on the best tax structure for your business so that you save more money in the long run.
Get Business Insurance
The best way to protect your business is to get business insurance. There are plenty of different types of insurance for your business – to fit every need and want. At the very least, you should consider purchasing general liability insurance, which can protect your LLC in the case of a lawsuit. Other popular types of business insurance include workers’ compensation insurance and professional liability insurance.
If you aren’t sure about what to get, consult a business attorney or a broker.
Obtain Necessary Licenses and Permits
Depending on your business type, you may be required to obtain specific licenses and permits to legally operate your business. You will need to apply for licenses and permits at the federal, state, and even local levels.
Use the Small Business Administration guide to understand what you’ll need to obtain at the federal level.
At the state level, check out the South Carolina official website.
And to check what local permits you’ll need, contact your local clerk.
If you are a bit overwhelmed about figuring out what licenses and permits you will need, you can hire a business attorney or an LLC formation service to do this for you.
No business is complete without going online. Having an online presence is essential to any business in this day and age. At the very least, you should consider getting a website. Your potential customers and clients will have a resource to learn more about your company by having a website. Having one also shows that you are a legitimate business.
Nowadays, social media is just as important as a website. Use platforms like Facebook, Instagram, and TikTok to reach broader audiences.
How to Keep Your LLC Compliant in South Carolina
To keep your LLC in good standing with the State of Rhode Island, you must ensure it remains compliant. You can do this by:
- Filing the annual report (only if filing taxes as a C Corporation)
- Maintaining a registered agent
- Ensuring all business permits and licenses are up-to-date
- Keeping up-to-date with state regulations
- Submitting and paying all federal and state taxes on time
- Reporting all new hires within 20 days of the employee’s first day of work
Tax Filing Requirements for LLCs in South Carolina
By default, your LLC will be taxed as a pass-through entity, so the tax filing requirements fall on the individual members of the LLC instead of the LLC itself. At the federal level, you will need to file either the Form 1065 Partnership Return or the Form 1040 Schedule C, depending on whether you are a multi-member or single-member LLC.
When it comes to state taxes, there are some additional tax filing requirements you may need to consider, depending on the type of business you have. You must apply for a seller’s permit if you sell any goods or services. This permit will allow you to collect taxes, which will then be paid to the State.
And if you have any employees in your business in South Carolina, you need to register for Unemployment Insurance Tax and the Employee Withholding Tax.
Frequently Asked Questions
How long does it take to register an LLC in South Carolina?
South Carolina has a pretty quick turnaround regarding filing the Articles of Organization and receiving your certificate. If you file online, your Articles should be processed within 1 to 2 working days. However, if you file by mail, expect it to take up to 10 working days, plus mailing time.
Unfortunately, the State of South Carolina does not offer any expedited services for the Articles of Organization. But since the turnaround time is relatively quick if you file online, this should not pose an issue for most.
What tax structure should I choose for an LLC in South Carolina?
An LLC in South Carolina is treated as a pass-through entity by default. This means the tax obligations of the company’s earnings are passed down to the members of the LLC. Each member then reports their portion of the earnings on their personal income tax return. An LLC treated as a pass-through entity does not generally pay any tax at the state or federal level. This tax structure can be a great advantage as you avoid double taxation.
However, there are some specific cases where being taxed as a corporation can be the way to go. If you are considering this, talk to an attorney or an accountant to better understand the situation.
Should you hire an LLC formation service in South Carolina?
Whether to Hire an LLC formation service is entirely up to you. Many entrepreneurs can form an LLC in South Carolina without too much of a hassle. However, if you would prefer the convenience of having someone else to take care of the paperwork for you, hiring a formation service could be beneficial. Doing so can help you focus on other parts of your business instead of filling out paperwork. LLC formation services can even help you obtain the necessary licenses and permits needed for your business.
Filed under: South Carolina Business Guides