South Carolina consistently ranks as one of the top five states in the U.S. to do business in.
Its proximity to New York in the north and Miami to the south makes it an ideal midway point to reach businesses nationally and globally.
And the state offers access to many skilled employees, courtesy of local educational institutions. Also, the South Carolina Community Development Division offers many programs and resources for new business owners.
So by all accounts, South Carolina is an ideal place to form your LLC.
6 Steps to Form an LLC in SC
- Step 1: Choose a business name for your LLC
- Step 2: Appoint a registered agent
- Step 3: File the South Carolina LLC Articles of Organization
- Step 4: Collect certified copies of your LLC formation documents
- Step 5: Create an LLC operating agreement
- Step 6: Get an EIN (Employer Identification Number) from the IRS
- Costs to set up an LLC in South Carolina
- Next steps
Step 1: Choose a business name for your LLC
Choosing a company name is the first step in LLC formation in South Carolina.
South Carolina law has several specific naming requirements:
- The LLC's name must include the words “Limited Liability Company” or “Limited Company” or any of its abbreviations (LLC, L.L.C., Ltd. Co., etc.).
- There can’t be any restricted words in the LLC's name (i.e., bank, attorney, insurance) or any words that imply government affiliation like “treasury”, “federal” or “CIA.”
- The selected legal name must be available in the state and be different from other registered business names.
You can use the South Carolina Secretary of State's business name search tool to determine whether a name is available.
If you've decided on a name and want to prevent any other legal entity from using it, you can file for name reservation with the South Carolina Secretary of State. It gives you extra time while you get your business ready to operate. Name reservations are valid for up to 120 days and cost $25.
Some small businesses use trade names, also called a DBA — “doing business as.” Trade name registration makes sense when you:
- Have several brands under your company umbrella
- Couldn’t register a legal LLC name you wanted
- Transfer your LLC registration from another state
Foreign LLC business owners must file the Adoption of a Fictitious Name form with a self-addressed stamped envelope plus a $2 state filing fee to:
Secretary of State
Attn: Corporate Filings
1205 Pendleton Street, Suite 525
Columbia, SC 29201
Or complete the application online.
Step 2: Appoint a registered agent
In South Carolina, every type of incorporated business must have a registered agent. LLCs are no exception.
A registered agent in South Carolina is an individual or business entity you appoint to receive legal documents on behalf of your LLC. The appointee must have a physical presence in the state (no P.O. boxes accepted) and be available during regular business hours in case of service of process.
Essentially, you have two options:
- Appoint an individual who lives in South Carolina (yourself included)
- Or hire a professional registered agent service provider
Serving as your own registered agent saves you money upfront. But there are several valid reasons why using a professional provider makes sense:
- You must include your registered agent's contact information in your formation documents. So if you're running a business from home, your home address becomes public. Bye, privacy — hello junk mail and unsolicited offers.
- Receiving service of process documents in front of your family, neighbors, or customers can be embarrassing. Likewise, there may be severe consequences if you miss an important legal document like a subpoena.
- If you move, you don't have to worry about updating your address with the Secretary of State and paying extra fees.
On average, annual registered agent services cost $49-$159. Note that this only includes fees paid to the service provider and not state filing fees. Professional service providers can also renew your LLC registration with your state and provide company formation services like filing your Articles of Organization with the state. However, you can easily handle the latter yourself for less!
Step 3: File the South Carolina LLC Articles of Organization
Once you've decided on a name and appointed a registered agent for your LLC, you can file Articles of Organization with the South Carolina Secretary of State. This document specifies:
- Your LLC's legal name
- Registered address
- Lists of the LLC members (owners)
- Registered agent contact information
- Company management structure
The LLC management structure clause is important because it tells the state how your LLC will operate. Some LLCs are managed by their owners, who are called members. Others elect to hire an external person instead of the members to manage the business.
The cost to file Articles of Organization in South Carolina is $110. You can file by mail or save time by filing online. In this case, you can pay by debit/credit card and get same-day or next-day service along with an instant filing confirmation.
Step 4: Collect certified copies of your LLC formation documents
Once the South Carolina Secretary of State approves your LLC's Article of Organization, you'll want to get an official certified copy for your business records.
You may need to provide a copy to your bank when you open a business bank account (more on that later). So it's a good move to have a copy in your files to access when you need it.
Document copying fees in South Carolina start at $3 per page.
Step 5: Create an LLC operating agreement
Whether you're a single-member or multi-member LLC, you’ll want to create an operating agreement.
South Carolina, like most states, doesn't require you to file an operating agreement with the Secretary of State, but it's highly recommended to have this document internally. A company's operating agreement lays out the baseline company management principles around:
- Adding and removing members
- Capital contribution
- Voting rights
- Managerial responsibilities
In case of a sale or dispute about corporate matters, the operating agreement decides how you’ll resolve disagreements among members.
The benefits are obvious for multi-member LLCs, but what if you're a single-member LLC?
You may not need it now. But if you ever decide to add more members or become incapacitated, your operating agreement lets others know how to maintain your business while you're unable to. If you don’t have an operating agreement, any issues in your LLC will be decided according to South Carolina law, which may not be in your favor. You can find many templates online to draft a simple operating agreement. This is also something a professional service provider or corporate attorney can help you with.
Step 6: Get an EIN (Employer Identification Number) from the IRS
LLC members will need to get an Employer Identification Number (EIN) from the IRS to handle federal taxes. An EIN is like the Social Security number for your business and will be needed to file federal income taxes and in most cases, state taxes.
If you plan on having employees, your EIN is how the Internal Revenue Service will track your payroll taxes and employment activities. As a single-member LLC without any paid employees, you can skip this step for now.
Obtaining an EIN is free and takes only a few minutes.
You’ll need to answer several questions about your business — the type of business structure, industry, state of incorporation, and contact information. Once done, you’ll get your EIN instantly online.
Costs to set up an LLC in SC
The total costs to set up your South Carolina LLC will vary depending on its complexity and if you use professional help. To help you budger, here's a quick summary of the costs you may incur:
- Name reservation: $25
- DBA/Trade/Fictitious name: $2
- Professional registered agent service: $49 – $159 / annually
- Articles of Organization: $110
- Certified document copies: $3+
- Operating agreement: $0 – $2,000
- Retail sales tax license: $50
- GRAND TOTAL: $239 – $2,349
You're almost ready to go. There are just a few more administrative steps to finish. A business that sells taxable goods in South Carolina must obtain a retail license (also known as a sales tax registration) that costs $50. It also applies to sales made online if you sell more than $100,000 of goods in a year. If you have multiple retail locations, each location must have a separate retail license.
You'll need to register with the South Carolina Department of Revenue on the MyDORWay portal as either a new South Carolina business or a remote seller. This registration also applies to any business that needs a local tax ID to report other state taxes.
Unlike a sole proprietorship, personal and business finance commingling is a big no-no. Doing so can result in the loss of personal liability protection the LLC grants you as an owner.
So, open a business bank account as soon as you get your Articles of Organization approved.
Banks tend to offer incentives to business owners like reduced monthly fees, interest earned on balances, or discounted lending.
Here are some local South Carolina banks that offer small business bank accounts with account opening fees of $100 or less:
- Bank of America
- SC State Credit Union
- Bank of South Carolina
- First-Citizens Bank of South Carolina
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