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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Forming an LLC in South Carolina follows a streamlined process lacking in unusual requirements that shouldn’t pose many issues for the LLC organizers. Another business-friendly aspect of forming an LLC in the state is the lack of an annual report filing requirement, which is a necessity in most states.
To avoid a misstep in the filing process, follow these steps to start an LLC in South Carolina, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in South Carolina step-by-step
1. Select a name for your South Carolina LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the State of South Carolina:
- An LLC’s name must be distinguishable from the names of existing business entities on file with the South Carolina Secretary of State.
- An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”, “L.L.C.”, “LC”, or “L.C.” The abbreviations “Ltd.” and “Co.” may be substituted for the words “Limited” and “Company”, respectively.
Check name availability
To confirm that your chosen LLC name is available in South Carolina, perform a search using the South Carolina Secretary of State Business Name Search.
Reserve your LLC name with the Secretary of State
It is a good idea to reserve your LLC name with the South Carolina Secretary of State to prevent another business from using it before you file Articles of Organization and legally form your business.
File an Application to Reserve a Limited Liability Company Name with the South Carolina Secretary of State Corporations Division by mail to reserve a name for up to 120 days. The name reservation filing fee is $25.
2. Designate a registered agent
As in every U.S. state, forming an LLC in South Carolina requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in South Carolina OR if the individual or business is based out-of-state, they must have a business office in South Carolina.
3. File Articles of Organization
An LLC is created in South Carolina through the filing of Articles of Organization with the South Carolina Secretary of State.
You can file the articles online or by mail. The filing fee is $110 and can be paid by check (mail filings) or credit card.
The Articles of Organization must provide the following information:
- LLC’s name and designation
- LLC’s principal office address
- Registered agent name and address
- Whether the LLC is member-managed or manager-managed (include managers’ names and addresses if the LLC is manager-managed)
- The effective date of the Articles (if a later date than filing)
- Whether the LLC is perpetual or has a term end date
- The name and address of one or more LLC organizers and their signatures
Foreign LLC registration
An LLC formed in a state other than South Carolina that intends to do business in the state must register with the South Carolina Secretary of State.
Complete these steps to do business in South Carolina as a foreign LLC:
- Comply with South Carolina LLC naming restrictions and confirm that the LLC name is available using the Secretary of State Business Name Search.
- Appoint a South Carolina registered agent.
- File an Application for a Certificate of Authority to Transact Business with the South Carolina Secretary of State by postal mail (there is no online filing option). The filing fee is $110.
- The application must include either a Certificate of Good Standing or Certificate of Existence from the LLC’s home state that is no more than 30 days old.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in South Carolina, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your South Carolina LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
Register with the South Carolina Department of Revenue
Certain LLCs doing business in South Carolina are required to register with the South Carolina Department of Revenue. Examples include LLCs that collect sales tax on retail goods and services and LLCs with permanent employees.
You can register your LLC to pay state taxes online using the South Carolina Business One Stop website.
Obtain state and/or local business licenses
While there is no such thing as a South Carolina state business license, certain LLCs doing business in the state may need to acquire one or more state and/or local occupational licenses, permits, or certifications in the case that their type of business is regulated or if it is required by the local government.
Use the South Carolina Business One Stop website to find out more information about occupational licenses in the state and contact a city clerk in your municipality if you require additional consultation on how to fulfill local licensing requirements.
South Carolina LLC checklist
A South Carolina LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing business entities on file with the South Carolina Secretary of State.
- Must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”, “L.L.C.”, “LC”, or “L.C.” The abbreviations “Ltd.” and “Co.” may be substituted for the words “Limited” and “Company”, respectively.
Formational documents and filing fees:
- Application to Reserve a Limited Liability Company Name – $25 filing fee (optional)
- Articles of Organization – $110 filing fee
- Application for a Certificate of Authority to Transact Business – $110 filing fee (foreign LLCs only)
- An LLC is created in South Carolina through the filing of Articles of Organization with the South Carolina Secretary of State.
Additional legal obligations:
- Register with the South Carolina Department of Revenue – Required for certain LLCs doing business in South Carolina, including those that collect sales tax and those with employees
- Obtain state and/or local business licenses – Required for certain LLCs active in South Carolina depending on business type and location