How to Start an LLC in South Carolina (Step-by-Step Guide)

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FAQs

What is a DBA and how can it be used by an LLC in South Carolina?

A DBA (Doing Business As) allows an LLC to operate under a name different from its legal name. In South Carolina, it may be known as a fictitious or assumed name, and it’s filed with the county clerk where the business operates, enhancing branding and marketing flexibility.

Do LLCs in South Carolina have to file annual reports?

No, South Carolina does not require annual reports from LLCs.

Can I operate multiple businesses under one LLC in South Carolina?

Yes, you can operate multiple businesses under one LLC in South Carolina by using different DBAs for each one. This strategy keeps the initial setup simple while diversifying business activities under one legal umbrella.

What is the difference between a member-managed and a manager-managed LLC?

In a member-managed LLC, all members (owners) participate in the daily business operations and decision-making. In a manager-managed LLC, members appoint one or more managers to handle these responsibilities, which can include non-members.

What are the first steps to starting an LLC in South Carolina?

The first step is to choose a unique business name and verify its availability. Next, file the Articles of Organization with the South Carolina Secretary of State and appoint a registered agent. Then, obtain any necessary licenses

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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 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.

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:

1. An LLC’s name must be distinguishable from the names of existing business entities on file with the South Carolina Secretary of State.
2. 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.

Need help coming up with a business name? Check out our free business name generator.

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.

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

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.

4. Create an operating agreement

Although not a legally mandated step for starting a new company and 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:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. 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 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.

Obtain state and/or local business licenses

South Carolina does not require any standard license at the state level in order to operate a business. However, there are a number of license types that you likely will need to obtain based on the type of business and other factors.

• Business tax license: Under state law, any business that engages in retail sales must have a South Carolina sales tax license. This license allows the business to collect sales tax and pay it to the Department of Revenue. There is a $50 fee to obtain this sales tax license, which you can obtain online through the South Carolina Department of Revenue.
• Occupational licenses: In South Carolina, the specific licenses and permits your business requires can vary significantly based on the industry. It’s essential to research and comply with all regulatory requirements to operate legally and successfully in your field.
• Local licenses: Outside of state-level requirements, each city and county within South Carolina can require business licenses based on their own criteria, and may also have zoning or permit laws. You will want to be sure to find the exact requirements for the municipality where your business is located.

For information on state business licensing requirements, visit the South Carolina Department of Consumer Affairs website. For information on local licensing requirements, contact a city or county clerk in the area where your LLC is based.

Understand state taxes

South Carolina allows LLCs to be treated as pass-through entities for state tax purposes. This means that the business itself does not pay taxes, and the corporate tax rate does not apply. Instead, each member will pay personal income taxes on their share of the income and profits from the business when filing tax returns.

• South Carolina tax rates: Members are taxed according to South Carolina’s graduated personal income tax rates, which can range from 0% to 7%, depending on the taxable income reported.
• Self-employment taxes: LLC members are usually considered self-employed and must pay the relevant state and federal taxes. This means paying self-employment taxes, which cover contributions to Medicare and Social Security; these are calculated as 15.3% of their share of the LLC’s net earnings.
• LLCs with employees: If your LLC has employees, employer taxes will also be involved. This means withholding income taxes on behalf of employees and paying for things like state unemployment insurance taxes and workers’ compensation insurance.
• Register with the South Carolina Department of Revenue: LLCs active in South Carolina (including foreign LLCs) may be required to register with the Department of Revenue to satisfy state tax requirements. This is generally done as a part of the Business Tax Application process, which can be done online.

You can register your LLC to pay state taxes online using the South Carolina Business One Stop website.

Understand BOI reporting

The Beneficial Ownership Information (BOI) Reporting Rules, implemented under the Corporate Transparency Act (CTA), took effect in January 2024.

These rules require specific business entities such as corporations, limited liability companies (LLCs), and other similar organizations registered in the United States to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

Filing deadlines

The regulations establish varying deadlines for companies depending on their registration timeline and the effective date of their LLC formation:

• Entities in existence before the start of 2024 have until the end of the calendar year to submit their initial report.
• Those established or registered after the start of 2024 have 90 days after their formation notice to file.
• Businesses registering in 2025 have 30 days to submit their report.

All filings must be completed digitally through FinCEN’s designated BOI reporting system.

Learn more about BOI Reporting.

Post LLC tasks

Set up business bank accounts

Opening a business bank account for an LLC is not a legal requirement, but tax and legal professionals highly recommend it. Separating personal finances from business transactions is essential to maintaining the integrity of the LLC’s limited liability protection.

A business account also aids in clearer financial tracking, easier tax preparation, and improved management of business expenses, which in turn enhances the company’s credibility with clients and suppliers.

For LLC owners exploring banking solutions, Found, Relay, and Mercury are noteworthy options to consider. These platforms are tailored to meet the specific needs of small businesses, offering benefits such as online banking accessibility, competitive fees, and financial management tools. These features make them excellent choices for LLCs focused on streamlining their financial operations effectively.

Obtain a Certificate of Good Standing

While the state of South Carolina does not have a Certificate of Good Standing, it does offer something similar in purpose: a Certificate of Existence. It’s a legal document that confirms an LLC is registered with the South Carolina business ecosystem. Unlike a Certificate of Good Standing, it does not indicate that a business is up to date on other requirements.

To obtain this certificate, businesses must go through the South Carolina Secretary of State’s office. There is a $10 filing fee.

Build a website

In the modern age, almost no business exists without a website, and creating your own is one of the first things you can do to establish your LLC. A simple website can ensure customers find you easily and give you credibility in the community.

Even if you are not very technical, setting up a website can be simple. Here are some steps you can begin with:

1. Choose and register a domain name that reflects your business.
2. Select a web hosting service to store your website data.
3. Use a website builder like Domain.com or GoDaddy, which offers easy drag-and-drop interfaces for those without coding skills.
4. Customize your website to appeal to your target audience by designing it with relevant pages, content, and visuals. Many site builders offer templates to make this simple.
5. Incorporate an e-commerce platform if you plan to sell products directly from your site.
6. Before going live, thoroughly review and test your website to ensure functionality.

Costs to set up an LLC in South Carolina

There are several costs involved in forming and maintaining an LLC in South Carolina. Here are some of the key expenses to consider early on:

• Incorporation fees: All LLCs must pay a mandatory state fee to register with the South Carolina Secretary of State and submit LLC formation documents like the South Carolina Articles of Organization. The fee is $110, whether filed by mail or via online filing.
• Registered agent services fees: While not required by the state, having a registered agent is highly recommended. A registered agent is a person or company that accepts legal services on behalf of your South Carolina LLC. Fees for registered agent services typically start around $50 per year and go up based on the exact services you are looking to use.

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:

1. Comply with South Carolina LLC naming restrictions and confirm that the LLC name is available using the Secretary of State Business Name Search.
2. Appoint a South Carolina registered agent.
3. 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.