Forming an LLC in SC requires filing Articles of Organization with the South Carolina Secretary of State. An LLC is a way to legally structure your business that protects your personal assets in case your business is sued or has financial issues.
This guide on how to form an LLC in South Carolina will take you through the pertinent steps required in setting up your business. We’ll also include a few other recommendations that are helpful in the smooth operation of an LLC.
It’s worth remembering that while an LLC is a great way for business, it can also be used to hold assets like real estate, vehicles, etc. So here’s how you can go about setting up your SC LLC.
1. Naming Your SC LLC
The LLC name is perhaps the first and foremost requirement that you should get right. Registering the right name involves not just zeroing in on a desirable name, but also checking its availability.
SC LLC names should be “distinguishable upon the records.” This means that your chosen name can’t be the same as, or very similar to, existing entities registered with the state. One way to check for name availability is to use the Business Name Search function on the South Carolina Secretary of State website.
Once you find the right name, it’s advisable to check the USPTO Website to ensure that there are no possible trademark issues.
South Carolina LLC Designators
Limited liability companies in South Carolina must end their names with a proper designator. Acceptable designators under SC law include:
- Limited Liability Company
- Ltd. Liability Co.
- Limited Liability Co.
- Ltd. Liability Company
The most commonly used designator is LLC. Although you can use any of the approved designators.
Name Reservation Requests (Optional)
You can file an Application to Reserve a Limited Liability Company Name without having to create an LLC. If approved, the state will reserve the chosen name for your LLC for 120 days. The application must be filed via mail and require a filing fee of $25.
2. Appointing A Registered Agent For Your South Carolina LLC
A Registered Agent is a person or business entity that receives service of process on behalf of your LLC. Service of process includes receiving legal documents like lawsuits, summons, subpoenas, etc.
General communication may also be directed to the Registered Agent, however, the primary role remains to receive service of process. As such, the agent must have a physical street address in South Carolina. The state doesn’t allow the use of PO Box addresses.
Ideally, the Registered Agent must also maintain normal working hours, so the service of process can be delivered if and when necessary.
Given these requirements, a Registered Agent is:
- A person who is a permanent resident of the state.
- A business entity that is domestic for the state and has its main office in SC.
- A foreign business entity that is permitted to do business in the state and has an office/street address.
Technically, if you meet these requirements, you or your friends/family could serve as the registered agent. If you own another business, that could serve as the registered agent as well. However, many people choose to hire the services of commercial registered agents. These are companies that specialize in this role, and can professionally handle the requirements.
3. South Carolina LLC Articles Of Organization
South Carolina Articles of Organization is the key form in setting up your SC LLC. This form must be filed with the Secretary of State. Your LLC comes into existence when the Articles of Organization are approved.
It’s possible to file this form online or via mail.
Filing online is the recommended method, due to the ease of use and overall convenience. The only downside is that the fee here costs $15 more than filing via mail. Online filing of Articles of Organization costs $125.
To file the Articles of Organization via mail, you’ll need to download and complete the form. Include the $110 filing fee as a check or money order made payable to “South Carolina Secretary of State.”
When filing forms via postal mail, include two copies of the Articles of Organization and a self-addressed envelope. The copies and form have to be identical and must have the signature of the organizer. Mail the completed form to:
Secretary of State
Attn: Corporate Filings
1205 Pendleton Street, Suite 525
Columbia, SC 29201
4. SC LLC Operating Agreement
Operating Agreements are internal documents of your LLC. There is no need to file them with any government agency. However, it is highly advisable and responsible to have an Operating Agreement when you start your LLC.
This agreement shows that your business is being operated and governed as a separate entity. There are no set rules on what an Operating Agreement should contain. However, a thorough agreement will cover the most important aspects.
These include the roles/responsibilities for each member, sharing of profits, approach to taxation, hiring, conflict resolution, voting rights for members, and more.
Even single-member LLCs should have an operating agreement in place.
5. Get Your Federal Tax ID (EIN)
Any LLC with more than one member must have an EIN (Employer Identification Number). You’ll also need this if you intend to hire employees. In fact, several aspects of normal business operation depend on your SC LLC having an EIN. These include everyday necessities like having a bank account for your LLC.
The federal tax ID (EIN) is a nine-digit number assigned by the IRS. There is no filing fee to get this number. The process is fairly quick and easy.
The easiest way to get an EIN is to file for EIN online.
In case you can’t file online, you’ll have to download and fill Form SS-4. You’ll have to file this form via postal mail or fax. The latter works faster and has a quicker processing time.
Only apply for the EIN after your South Carolina LLC has been approved.
6. South Carolina LLC Annual Reports
Most South Carolina LLCs don’t have to file annual reports.
However, if you choose to have your LLC taxed as an S-corp or C-corp, your LLC will have to file annual reports. You might have to register with the South Carolina Department of Revenue to file the relevant forms and use the State Tax ID.
7. Business Licenses, Permits, Taxation
Once you create your South Carolina LLC, you’ll have to comply with local and state government rules and regulations for your business. Many of these depend on the industry of your LLC, while some may be affected by relevant laws in the city/county.
The same goes for state taxes, though there are other relevant considerations as well. These include taxes like business personal property tax, sales tax, employer tax, and more.
For federal taxation, the IRS treats LLCs as pass-through taxation. In most cases, your income from the LLC can form a part of your personal tax returns. There are formalities to consider, depending on whether your LLC in SC is a single-member or multi-member company. Similarly, structuring your LLC for being taxed as a corporation will alter the process as well.
Whatever choice you make, a responsible and careful approach to taxation, licenses, and permits is necessary. While doing it yourself is certainly possible, most people will find hiring professionals to be a better option.