How to Form a South Carolina LLC
Starting a small business can be an exciting endeavor. In South Carolina, small businesses employ nearly half of the state’s workforce. With a growth rate that’s above average for the country, South Carolina is a great place to plant roots and begin a new business venture.
That said, when forming a new business in South Carolina (or any state), you’ll need to decide which type of entity to create to legally establish your business. If you decide to start a South Carolina LLC, you’ll be able to enjoy a variety of benefits, from lenient tax structures to fewer reporting requirements.
We’ll walk you through how to form an LLC in the Palmetto State below.
How to Start an LLC in South Carolina
Here are the steps you’ll need to follow to form an LLC in South Carolina:
1. Name your South Carolina LLC.
Deciding on a name for your South Carolina LLC involves several factors. You should choose a business name that suits your brand, helps convey the product line or services your LLC offers, and follows South Carolina naming laws.
These laws include omitting offensive or derogatory words, as well as the words bank, credit union, mutual, insurance, casualty, or trust.
We recommend making a quick list of name options that you’re satisfied with. Once you have your list, you’ll want to run the names through the South Carolina Secretary of State Business Name Search. This database can be used to find out if a name you’ve chosen is available or taken by another South Carolina business.
Once you’ve selected a unique name, you’ll need to choose an LLC designation. This designation allows the South Carolina government to quickly denote business entities by name only.
Below is a list of designations you can choose from:
- Limited Liability Company
- Ltd. Liability Company
- Limited Liability Co.
- Ltd. Liability Co.
Let’s say you decide to name your catering business “Palmetto Food Pros.” When adding a designation, your official name might become “Palmetto Food Pros, Ltd.” or “Palmetto Food Pros, Limited.”
Now that you have your official South Carolina LLC name, you can reserve it for up to 120 days with a $25 filing fee. To complete this online, you can return to the Business Name Search, enter the name you’re reserving and click “Add New Entity.”
This will lead you to the online reservation and payment system. You can also file via mail by downloading the LLC Name Reservation Application and mailing it to the address listed on the form.
Trademarks and DBAs
Next, you might consider trademarking your new LLC name. This can be done at the federal or state level. To trademark through the federal government, you’ll need to first browse the United States Patent and Trademark Office’s trademark database to see if a trademark exists for your business name. If not, you can register directly online.
At the state level, you can look through the South Carolina existing trademarks list. If you do not see your LLC name on this list, you can apply for a trademark through the state online or by mail. There is a $15 filing fee.
Finally, you may also consider securing a DBA for your South Carolina LLC. A DBA or “doing business as” name allows your LLC to sell products or services under a name that’s different from your official LLC name.
In South Carolina, you are not required to file a DBA to use a different name; however, it can be helpful to file a DBA at the county level.
2. Choose a registered agent.
Next, you’ll choose a registered agent for your South Carolina LLC. Every LLC in South Carolina must appoint a registered agent. Your agent will receive important communications, legal documents, and tax documents from the South Carolina Secretary of State for your company.
You can assign an individual or business entity as your registered agent, as long as they have a South Carolina address (residential or operating). Your agent is also expected to be available every weekday at their office location between 9 a.m. and 5 p.m. to receive government communications.
South Carolina LLCs are allowed to appoint a member of their company as their registered agent, but there are some disadvantages to consider. If you act as your own registered agent:
- You must be available during normal working hours, limiting your ability to set your own work schedule.
- You could receive legal subpoenas or summons in front of clients, investors, or potential partners, which might hurt business deals or relationships.
- You must disclose some personal information, which will be made public record.
3. Register your South Carolina LLC.
Now you’re officially ready to register your South Carolina LLC with the secretary of state’s office by submitting your articles of organization. This form can be filed online or through the mail. There is a $110 filing fee.
To complete your articles of organization, you’ll need to submit the following information:
- The LLC name with designation
- The LLC operating address
- Your registered agent’s full name and operating address.
- The LLC’s organizers’ names and addresses
- LLC terms (only check this box if your LLC has an end date in mind)
- Management structure (managed by members or outside managers)
- LLC liability (only check this box if a partner wants to be legally and personally liable for any business debts)
- Effective date
- Any other desired provisions
- Signature of all organizers listed
4. Compose an operating agreement.
Now that your LLC is registered, you can create your South Carolina LLC operating agreement. South Carolina does not require LLCs to create an operating agreement, but this practice is encouraged. Your LLC operating agreement will detail how your company will be run, dictate partner voting rules, and speak to financial processes.
LLC operating agreements typically include:
- The LLC purpose and mission statement
- An operational plan
- Specific company rules and requirements
- Partner terms (names of partners, voting details, meeting schedule, how to add and remove partners, etc).
- A dissolution process
Although operational agreements can be beneficial for LLCs with employees, they’re also a good idea for sole-member LLCs. This document can outline how your LLC should be managed if you’re incapacitated or otherwise unable to manage your LLC.
5. Apply for required business licenses.
After you’ve created your operating agreement and received official approval for the state, you’ve successfully formed an LLC in SC. Next, you’ll want to get any business licenses and permits you need to operate legally.
In South Carolina, you are not required to obtain a general business license to operate an LLC. However, depending on your industry, you might need to obtain special permits, licenses, or business registrations. Some cities and counties may also have their own license requirements that you should review.
6. Get an EIN and set up tax accounts.
Next, it’s time to establish your South Carolina LLC with the IRS so you can pay taxes. In general, unless you’re the only member of your LLC, you’ll be required to sign up for an EIN (employer identification number) via the IRS website.
You can think of your EIN as your LLC’s social security number—it will be used to hire employees, open business financial accounts, file your taxes, and apply for financing.
Your LLC can be taxed three different ways—and the way you’re taxed will determine the tax accounts you’ll need to set up.
If you’re a freelancer and created an LLC to separate your business and personal finances, you do not need to apply for an EIN. Instead, you can set up bank accounts for your LLC using your social security number. You’ll only be required to file individual tax returns as a self-employed professional.
If you’d rather separate your business and personal finances, you might want to secure an EIN, in which case, follow the steps below for filing as a standard LLC.
Standard LLCs require an EIN and are viewed as pass-through entities. This treatment exempts LLC partners from paying corporate taxes, allowing them to instead report their LLC losses and profits on their individual tax returns.
LLCs as Corporations
You can also choose to have your LLC taxed as a corporation. First, you should decide if you want to be taxed as a C-corporation or S-corporation.
C-corporations are taxed at the business and individual level, leading to double-taxation. This requires partners to file both corporate and individual tax returns. S-corporations, on the other hand, are treated as pass-through entities, which are taxed similarly to standard LLCs.
If you choose to file your taxes as a corporation, you’ll need to file an Form 8832 with the IRS to select how your company should be taxed.
Other Tax Requirements
In addition to registering for an EIN, South Carolina LLCs are required to pay quarterly estimated taxes. Failing to do so can result in more taxes due during tax season, thanks to tax penalties. You can pay your quarterly federal taxes via the IRS and your South Carolina quarterly taxes through the South Carolina tax portal, MyDORWAY.
If you have employees on your payroll, you’ll also need to deduct taxes from their paychecks. This can be done by setting up a South Carolina withholding account.
Lastly, if you collect sales tax, South Carolina requires you to apply for a sales tax license through the Department of Revenue. Your sales tax account can then be set up via MyDORWAY.
We recommend partnering with a licensed accountant or tax specialist if you have any questions during the tax setup process.
7. Keep your South Carolina LLC compliant.
Now that you’ve set up your LLC in South Carolina, it’s important to remain in good standing with the state by ensuring your taxes are paid on time and all licenses are kept up to date.
Although many states require LLCs to file an annual report, South Carolina does not. However, if you file your taxes as a corporation, you will be required to fill out an annual report. There is a minimum filing fee of $25 (the actual fee is .1% of capita earned + $15).
Frequently Asked Questions
We’ve walked you through how to start an LLC in South Carolina, but you might have a few remaining questions. Browse the following FAQ section to get answers to questions many business owners have about forming LLCs in South Carolina.
How much does it cost to start an LLC in South Carolina?
The exact costs for starting an LLC in South Carolina will always vary from company to company. However, these are the general filing expenses you should be prepared to pay to register your LLC:
- Reserving an LLC name: $25
- Trademarking your LLC name: $15
- Filing your articles of organization: $110
- Filing your annual report (LLCs taxed as corporations only): ~$25
These startup expenses do not cover the costs of any special permits, licenses, or additional registrations your LLC may be required to purchase. This list also does not include the cost of hiring a registered agent, requesting expedited filing, working with a tax specialist, or partnering with a business consultant to help you navigate through this process.
A full list of filing fees can be viewed on the South Carolina Secretary of State’s website.
How long does it take to form an LLC in South Carolina?
Much of the South Carolina LLC formation process depends on how long it takes you to fill out the required paperwork, choose a business name, find a registered agent, draft an operating agreement, and obtain licensing and tax accounts.
If you’re able to move quickly, you can set up your LLC in a matter of days, since South Carolina offers same- and next-day business filing options. If you’re applying by mail, however, you should expect the process to take a couple of weeks.
What are the benefits of forming an LLC in South Carolina?
Forming an LLC in South Carolina comes with many benefits over other business entity types. Here are a few key benefits worth reviewing:
- Fewer reporting requirements: South Carolina LLCs have fewer required reports to file with the government. Unlike most states, DBA paperwork and annual reports are not required for LLCs.
- Adaptable business structure: Although corporations have a more strict business model to follow (appointing a board of directors, issuing stocks, and establishing shareholders), LLCs can enjoy a much more flexible management structure that can be adapted to suit your company’s needs.
- More affordable: Since LLCs in South Carolina are required to turn in less paperwork, this business type is often a more affordable option to other business entities.
- Protection from double taxation: Another key benefit you’ll enjoy as an LLC owner is not being required to pay both corporate and individual taxes on your company’s profits.
The Bottom Line
LLCs offer a flexible, affordable, and scalable business model for many South Carolina entrepreneurs. Forming an LLC in the Palmetto State can be done quickly and entirely on your own, though professional help is always advisable.
Although there are many advantages to enjoy when forming a South Carolina LLC, it’s important to explore all of your options before committing to a business type. We recommend talking to a startup lawyer before deciding which business entity best suits your needs.
- Advocacy.sba.gov. “South Carolina 2020 Small Business Profile”