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South Carolina LLC For Beginners: No Attorney Required

South Carolina LLC For Beginners: No Attorney Required

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South Carolina LLC For Beginners: No Attorney Required

An LLC or Limited Liability Company is a business structure (also called a business entity) that is ideal for many small businesses because it offers protection to its owners from personal liability for business debts and lawsuits. Essentially, this means if the business faces financial issues or legal problems, the personal assets of the owners, such as their homes and cars, are usually safe and cannot be used to settle business debts.

Besides liability protection, the Limited Liability Company is easier to manage compared to corporations, and they offer greater flexibility in how they are run and taxed versus a sole proprietorship or partnership.

There are a few steps to start a South Carolina, and this guide walks you through them and answers some common questions.

Related: Guide to starting a business in South Carolina

What are the steps to form a South Carolina LLC?

Step 1: Choose a Name for the LLC

The first step in forming a South Carolina Limited Liability Company is to make sure the name you want is available.  

Before registering an LLC, you need to make sure the name is available to use, as each LLC must be distinguishable from other entity names registered in the state of South Carolina. The South Carolina Secretary of State makes it easy to search and verify if your LLC name is available.  Here is more information on doing a South Carolina LLC name search.
 
In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:

  • Limited Liability Company
  • Limited Company
  • LLC
  • L.L.C.
  • LC
  • L.C.
  • Ltd. Co.

A comma may be used after the business name and before the corporate ending.  “Blue Ridge Botanicals LLC” and “Blue Ridge Botanicals, LLC” are both acceptable.

If there is an LLC name you want to use but are not ready to register the LLC, you can file the Application to Reserve a Limited Liability Company Name with the Secretary of State to hold a name for up to 180 days.

Before settling on a name, you may want to do a domain name (sometimes referred to as a URL) search to try and match your business name and website address.

Step 2: Appoint a South Carolina Registered Agent

Every LLC in South Carolina is required to have a registered agent, which is simply someone with a South Carolina street address who will be responsible for any legal correspondence, for example, if the business is served papers in the event of a lawsuit.

Many LLC owners are their own registered agent, but it is possible to hire a registered agent service like Northwest Registered Agent. The reasons why someone would hire a registered agent service include when the owner lives in another state or if the owner prefers that their personal address not be on public record.

Related: What is a South Carolina registered agent?

Step 3: File the South Carolina LLC Articles of Organization

The paperwork to officially create an LLC in South Carolina is called the Articles of Organization. To submit the paperwork, either file online through the South Carolina Secretary of State’s website.  If you prefer to fill out and mail the application, download the Articles of Organization Form

Related: How to fill out the South Carolina Articles of Organization

When filling out the Articles of Organization, there are a few sections that can be confusing. I’ll explain some of these to help get your LLC started right.

Initial designated office: Enter the street address, city, state, and zip code of the initial designated office.  This address can be the LLC’s physical address, or it can be the address where the business records are stored.  The initial office has to be an address in South Carolina, but it can not be a PO Box.

Management – This section asks whether the LLC is Member-Managed or Manager-Managed.

  • Member-Managed LLCs have an active involvement in the management of the LLC.
  • Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation.

Most LLCs are member-managed.

Member(s) liable for its debts: Most filers skip this step, but if one or more of the members will be liable for the debts and obligations of the LLC, check the box.

Company term: In this section, you can indicate how long the LLC will remain in existence.  Most LLCs will choose a Perpetual duration and skip this step; however, some businesses (usually investment-related) will have a specific closure date.  If you have a specific end date in mind, click the “Term Company” box and enter the date.

Delayed effective date: If you want the LLC to start immediately, as most filers will, leave this step blank.  If you want the LLC to start later, enter a date less than 90 days in the future to start.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business isn’t going to have any activity until the start of the year.  You can eliminate the need to file a partial-year business tax return by delaying the start date until the following year.

Organizer information: An LLC Organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any LLC member can be listed as an organizer.

Only one organizer is required, but more can be listed if desired.

Summary of forms: An LLC that plans to elect corporation tax status will need to file form CL-1.  If the LLC plans to be taxed like a disregarded entity (sole proprietorship or partnership), it won’t need to file this form. By default, single-member LLCs are taxed like a sole proprietorship, while multi-member LLCs are taxed like partnerships.

Step 4: File the Initial Annual Report of Corporations

Only for LLCs that elect to be taxed as a C corp or S corp, Form CL-1 (Initial Annual Report of Corporations will be due within 60 days of the LLC being formed and will have an annual fee of $25.

If you are worried about making a mistake when forming your LLC, or just don't want to deal with filling out state paperwork, an LLC formation service will help guide you through the process. My top recommended services include:

  • Zenbusiness - Best for beginners (starting at $0 plus state fees)
  • Bizee - Best prices for additional business services (starting at $0 plus state fees)
  • Northwest - Best privacy protection ($39 plus state fees)


What To Do After Forming A South Carolina LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a South Carolina LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states (including South Carolina)do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: South Carolina operating agreement template

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.

Related: How to apply for an EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Depending on the age of the LLC, a South Carolina Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to open a business bank account for your LLC

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business license: Some cities require businesses to obtain licensing before they can start. More information about city, county, and state business licenses is available on the South Carolina Business One Stop website.
  • Professional license: Certain services, such as barbershops, accountants, salons, and others, must be licensed.
  • Retail license: In order to sell products and certain services and collect sales tax, a retail license is required by the South Carolina Department of Revenue.
  • Unemployment insurance registration: Businesses with employees will need to register with the South Carolina Department of Employment and Workforce to register for unemployment insurance.

Related: What business licenses are needed in South Carolina?

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in South Carolina or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

South Carolina LLC FAQs

How much does it cost to start an LLC in South Carolina?

The cost to form an LLC in South Carolina is a state filing fee of $110.

How long does it take to start an LLC in South Carolina?

LLCs formed online in South Carolina are processed within 1-2 business days, while mailed in forms can take up to two weeks.

Is there a yearly fee for an LLC in South Carolina?

LLCs that are taxed as a sole proprietorship or partnership will not file an annual report, and the annual fee is $0. LLCs taxed as a C-corp or S-corp will file the Initial Report of Corporations (Form CL-1) and pay a $25 annual fee each year to the South Carolina Secretary of State.

What is a Foreign Limited Liability Company?

A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state that wants to operate physically in South Carolina. Physically operating means having a presence, such as having an office or hiring an employee.

Registration with the Secretary of State is required before an out-of-state LLC can transact business.

Related: What is a foreign LLC?

South Carolina LLC For Beginners: No Attorney Required

South Carolina LLC For Beginners: No Attorney Required

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