How To Set Up A South Carolina LLC

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

Besides liability protection, a Limited Liability Company is easier to manage than a corporation, and it offers greater flexibility in how it is run and taxed than 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: Starting A Business In South Carolina Checklist

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 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.

Step 2: Appoint a South Carolina Registered Agent

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

LLC owners in South Carolina have two primary options for fulfilling this requirement. Many choose to act as their own registered agents, particularly if they reside in the state. However, some opt to hire a professional registered agent service. This choice is often preferred in two scenarios: when the LLC owner lives out of state or wants to keep their personal address off public records. Professional services offer the added benefits of ensuring compliance with state regulations and managing important legal correspondence, making them an attractive option for those seeking convenience and privacy in their business operations.

Related: How To Appoint 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, a few sections can be confusing. We’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 the address where the business records are stored. The initial office has to be 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 LLC’s debts and obligations, check the box.

Company term: In this section, you can indicate how long the LLC will remain in operation.  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 forming 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 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.

What To Do After Forming A South Carolina LLC

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

Prepare a South Carolina LLC Operating Agreement

The LLC operating agreement is a document that governs the framework of an LLC and 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.

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). Like an individual’s social security number, the EIN identifies business entities for tax purposes.

Related: How To Register 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 LLC’s age, a South Carolina Certificate of Good Standing may be needed to prove that the LLC is active and in good standing with the state.

Apply for Business Licenses and Permits

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

• Business license: Some cities require businesses to obtain licensing before they can start. The South Carolina Business One Stop website has more information about city, county, and state business licenses.
• Professional license: Certain services, such as barbershops, accountants, salons, and others, must be licensed.
• Retail license: The Department of Revenue requires a South Carolina Retail License to sell products and certain services and collect sales tax.
• Unemployment insurance registration: Businesses with employees must register with the South Carolina Department of Employment and Workforce to obtain unemployment insurance.

Related: How To Register A Business 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).

South Carolina LLC FAQs