Are you looking to form a limited liability company (LLC) in the state of South Carolina, but you’re not sure how the formation process works? There are several important steps when it comes to creating a South Carolina LLC that is compliant and able to do business in the state.
To get started, please reference our 6-step guide below or hire an affordable online LLC formation service.
Guru Tip: If you want help setting up an LLC, we recommend the LLC filing service ZenBusiness. It has excellent pricing, features and company values.
What is a South Carolina LLC?
The South Carolina LLC is one of the most popular business structures in state. It's a more casual and flexible type of business than a corporation, but includes personal asset protection that's lacking from sole proprietorships and general partnerships.
LLCs in South Carolina have simple formation and maintenance requirements, several options for how they can be taxed, and flexible management. From one-person businesses to multi-member LLCs with several owners, the LLC is a popular choice for a reason.
Forming an LLC in South Carolina (in 6 Steps)
Step One) Choose an LLC Name
Your LLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
Legalities
In the state of South Carolina, every limited liability company is required to have either the initials “LLC” or the phrase “limited liability company” in the name. In addition, you cannot include any words that refer to other business types (like “corporation” or “incorporated”), and you also can’t use words that are typically used to refer to specific kinds of businesses (like “bank” or “law office”).
Explanatory Naming
Another aspect to consider is including language that explains what your business does ― for example, if you’re a plumber, put the word “plumber” or “plumbing” in your LLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Get Your Business Domain
To fully embrace the business name, register your URL. With GoDaddy you’ll be able to quickly build a company website so that nobody else can use or take it.
Step Two) Designate a Registered Agent
Every LLC in South Carolina is required to designate a registered agent, which is the individual or registered agent service that receives government correspondence on behalf of your business, then forwards those documents to you.
According to the South Carolina Secretary of State,
A Registered Agent is the person who is designated and authorized to accept service of process for another person, usually a corporation or other business entity. All corporations, limited liability companies, limited partnerships and limited liability partnerships must file organizing documents with the South Carolina Secretary of State’s Office. These documents are required to include the name of the Registered Agent.”
Without a registered agent, you could lose your good standing with the state of South Carolina, and the state also has the right to dissolve your LLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
Guru Tip: We recommend designating an online service to handle these requirements. This eliminates junk mail and keeps your personal and/or business address off public record. ZenBusiness and Northwest Registered Agent both offer a free registered agent service when you use them to setup an LLC.
Step Three) File Formation Documents with State
Once you are ready to form your South Carolina limited liability company, you will fill out the articles of organization.
This is THE document that will register your LLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Your chosen business name
- Name and address of your registered agent
- Management style (member-managed or manager-managed)
- Name(s) and address(es) of the LLC’s manager
- Name and address of the LLC’s organizer
- Signature of organizer and registered agent
- Effective date
You can file this form online or download the form here. Mail it to the Secretary of State, and you’re good to go.
Cost to Form an LLC: The state of South Carolina charges a $110 fee to file by mail or a $125 online fee to form an LLC.
Processing Time: It can take 1-2 weeks for the state to process your mailed-in South Carolina LLC formation paperwork and get your finalized documents in the mail to you. You can also file online and have your filings back within 1-2 business days. Please note that the estimate of business days begins once ALL required paperwork is in order and filed correctly.
Step Four) Create an Operating Agreement
After you register an LLC in South Carolina, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for this document in order to open an account. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your Operating Agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your Operating Agreement or create one from a free template online. You can read more about Operating Agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the LLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
Federal Requirements
The vast majority of LLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important LLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
State Requirements
When it comes to state-level LLC taxes, South Carolina levies these taxes based on the nature of your business. If your LLC is considered a pass-through entity—usually a sole proprietorship or partnership—you’ll pay income taxes on your individual tax returns. However, LLCs which choose to be taxed as corporations will be subject to the state’s corporate income taxes. The corporate tax is 5%. You can learn all about South Carolina’s corporate income taxes as well as find forms here.
LLCs involved in retail sales are also responsible for the state’s sales tax. The current rate is 6%; you can read an in-depth guide for the tax here.
LLC owners with employees are also required to pay a number of taxes. First, employers are responsible to pay withholding taxes on employee wages. Essentially, you’ll keep back a portion of an employee’s wages and forward that tax to the state. You can learn more about South Carolina’s withholding taxes here. Similarly, South Carolina employers are also required to make payments to the state’s unemployment insurance. While it’s not technically a tax, you do need to pay it on a regular basis, so we’ve included it in this section. You can learn more about this fund at South Carolina Department of Employment and Workforce.
In addition to these general taxes, South Carolina also requires taxes specific to particular industries. For example, there are taxes on coin operated machines, laundromat surcharges, and more. You can browse a more extensive list of state taxes here.
Local Requirements
Depending on where in South Carolina your business is located, you could also need to pay some local taxes. For example, counties are permitted to impose an additional 1% sales tax (as voted on by local taxpayers). There are also a wide variety of other local taxes that may apply. You can check out this state map to verify your county’s fees. We also recommend that you contact your local government office to be sure you don’t overlook any local obligations.
Step Six) Obtain Business Licenses and Permits
The state of South Carolina does not have a statewide general business license that each LLC needs to acquire in order to do business.
However, South Carolina upholds the licensure required by the federal government for certain occupations, including agriculture, aviation, and more. Please consult the Small Business Association’s listings for federally-regulated industries requiring licensure.
And much like the state has industry-specific tax requirements, it also has licenses and permits that are required for businesses in certain industries. South Carolina has hundreds of these licenses, so there’s a good chance at least one of them applies to your LLC. We recommend that every LLC owner search through the state database of licenses for businesses here, and don’t forget that your local government may require licenses or permits as well. For example, there are nine counties which require a business license. You can find a list of these counties here.
Next Steps: What to do After Creating a South Carolina LLC
Open a business bank account
We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Get Business Insurance
Every South Carolina business with employees is strictly required to acquire workers’ compensation insurance. For more information on this policy, check out the South Carolina Workers' Compensation Commission. Essentially, this policy helps to pay your employees when a work injury or illness keeps them from working. After you obtain these legally required policies, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies.
Understand income reporting
Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year. The state of South Carolina offers information on rules and fees for your business’s income reports here.
Understand annual reporting
South Carolina is one of the few states that does not require LLCs to file an annual report. Normally, an annual report essentially serves to update the state on any pertinent information regarding your business that has changed over the course of the year.
Find an accountant
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how best to manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.