How to start an LLC in South Carolina
Entrepreneurs in the state of South Carolina will have their choice of several business structures: LLC, corporation, sole proprietorship, partnership, etc. For a variety of reasons, LLCs, or limited liability companies, are among the most popular. In this guide, we will break down how to start an LLC in South Carolina.
Limited Liability Companies are easier to set up and maintain than a corporation or S-corp, but they still offer substantial advantages for business owners. As the name suggests, LLCs provide liability protection, mostly by keeping the business owner’s personal assets separate from the liabilities associated with the business.
Starting a South Carolina LLC will involve filing the Articles of Organization with the SC Secretary of State. But there’s more to it than just that! Keep reading for a step-by-step breakdown of how to form a South Carolina limited liability company.
Consider utilizing an LLC formation service
There are two ways to form an LLC. You can either use a professional LLC formation service, or you can do the work yourself. Both options have pros and cons to consider.
If you use a service, two great options are Northwest Registered Agent and ZenBusiness. These are two companies that specialize in helping business owners form new business entities, including LLCs and corporations. They are essentially middlemen between you and the SC Secretary of State’s department.
With a service, you have the advantage of using a slick modern system to get your business registered. You will work with the service itself to prepare and file all the necessary paperwork, with tons of tips and tricks along the way. And if you run into any roadblocks, you can contact support for personalized help.
ZenBusiness has plans from just $49, so it’s quite affordable – and well worth it, considering how much time you will save.
The alternative is to complete the necessary steps on your own. Keep reading for a step-by-step breakdown.
Name your new company
Now, it’s time to select a name for your LLC. This should be a name that is relevant to your industry/business, and one that is memorable/catchy for your clients or customers.
Beyond choosing a “good” name, the name must also meet certain criteria. The most important is that the name must be unique from other businesses already registered in South Carolina.
Other requirements include the use of “Limited Liability Company”, “LLC”, or “L.L.C.” in the business name, as well as the avoidance of certain restricted words. For example, you cannot use any government-related terms, and banking/finance-related terms may require additional permission.
When you have found a name that meets the criteria and that you like, you can move on to step #3 below.
Using an Assumed Name in South Carolina
Before worrying too much about finding the “perfect” LLC name, it’s wise to keep in mind that SC does allow for the use of “assumed names”. Otherwise known as trade names or DBAs, assumed names allow a registered LLC to do business under an additional name, which is essentially added on to the existing business registration.
So, once you create your LLC, you can also register additional assumed names to give you some flexibility in how you brand and market your business.
Appoint a Registered Agent
Each new LLC in South Carolina must appoint a Registered Agent. This agent is the main point of contact for the business and is charged with receiving tax documents, legal notices, and more on behalf of the company. Obviously, this is an important role to fill!
You can be your own Registered Agent, or you can appoint an employee (or any other resident of South Carolina). However, do keep in mind that the Agent’s mailing address will become public record.
Alternatively, you can simply use a professional Registered Agent service. A service (such as Northwest Registered Agent or ZenBusiness) provides all the key services of a registered agent, and also allows you to keep your own address private. Plus, if you’re ever on vacation or otherwise unavailable, you won’t need to worry about missing an important mailing or document.
You will need to decide on your choice of Registered Agent before moving onto the next step, as you will need the Agent’s information to file the Articles of Organization.
Create an operating agreement
Note: This step is optional, but recommended.
Most LLCs should have an operating agreement – however, this step is technically optional, because you don’t need to submit the agreement anywhere. Even so, it’s strongly recommended to have one – particularly if your business has multiple owners.
What is an operating agreement? It’s an internal document that is drafted and agreed upon by all stakeholders of the company. Its basic function is to establish operating procedures and ownership structure guidelines for the new business. Thus, it’s vital to help avoid ownership conflicts in the future.
Using a service like ZenBusiness is helpful for this step because ZenBusiness provides a detailed template that you can use to draft an operating agreement. You could also opt to work with a local attorney in order to draft your agreement.
File LLC Articles of Organization
The South Carolina LLC Articles of Organization must be filed with the Secretary of State’s department in order to form an LLC in the state. This process can be done online, or through the mail. There is a nonrefundable $110 filing fee, which is payable to the South Carolina Secretary of State.
To file online
Use the SC Secretary of State’s website and follow the instructions to file the Articles of Organization. Pay the $110 filing fee by credit/debit card.
To file by mail
Download and fill out the Articles of Organization form. Include a check or money order for $110, made payable to the South Carolina Secretary of State. Mail the document to:
South Carolina Secretary of State’s Office
Attn: Corporate Filings
1205 Pendleton Street, Suite 525
Columbia, SC 29201
Once submitted, you will need to wait for everything to be processed. This generally takes up to 6-7 business days but maybe quicker or slower depending on the current backlog.
Apply for an EIN
Most businesses will want to obtain an employer identification number (EIN) from the Internal Revenue Service. This is a federal tax ID number used like a social security number for your business. It will be used on all federal tax filings and reports, and it’s required to hire employees.
You can apply for an EIN in minutes on the IRS website. There is no cost for the application, and most of the time EINs are issued instantly.
Apply for business licenses & permits
Many businesses will require various permits and licenses in order to operate legally. This is in addition to the LLC formation paperwork discussed above. Of course, the specific requirements vary depending on the type of business – as well as the location(s) that the business will operate.
South Carolina does not require a statewide general business license. However, certain business activities and industries will require a license from the state. You will need to research your specific requirements on the state level.
Federally, the situation is similar. There is no “general purpose” federal business license. However, many industries are subject to regulations and may require additional licenses or permits on the federal level. This includes industries like agriculture, finance, and healthcare.
And finally, there are some local-level requirements from city and county governments. Most cities do require a general business license, and specialty health permits, liquor licenses, etc. may also be required. Check with local government offices for details.
South Carolina LLC Tax Requirements
This is also a good time to research your tax reporting requirements for state taxes. For instance, many businesses will need to register for SC Sales Tax through the South Carolina Department of Revenue. And employers will need to register for unemployment insurance tax, as well as employee withholding tax.
Keep your business in good standing
Once your business is formed and up and running, you will have a brief break from compliance reporting requirements. But it won’t last too long! Most businesses have many annual requirements (tax returns, annual reports, permit renewals, etc.) as well as some quarterly responsibilities (federal quarterly taxes, employer taxes, etc.)
Thus, every business owner will need to continually work to keep their company in good standing with various state and local authorities, as well as the IRS. The specific requirements do vary depending on the type of business you run, but some of the most common needs are listed below.
Annual Report – South Carolina does not require an LLC annual report at this time
State employer tax returns
State sales tax returns
Federal employer tax returns
Federal quarterly taxes
Federal business and income tax returns
Local city/county tax returns
Annual renewals for business licenses and permits
This list is certainly not exhaustive, so you will want to do your own research. Once you have a list of all your responsibilities as a business owner, it’s a good idea to set calendar reminders for key due dates, so that you don’t miss any filings.
If you want help with ongoing compliance needs, services like Northwest Registered Agent and ZenBusiness may be of some assistance. They can help with certain filings directly, and send reminders for common due dates to help you stay on track. Your accountant or CPA may also be able to help with certain tasks.
Open a business checking account
Once you have an EIN and your formation documents/business licenses, you can open a new bank account for your business. And you should do this as soon as possible because it is very important to keep your business and personal finances as separate as possible.
To open a business bank account, visit a local bank or credit union. You may wish to call ahead to see what their requirements are, and what you’ll need to bring. Once the account is opened, use this new account for ALL business transactions.
By separating your business and personal finances, you can keep your accounting efforts much simpler and cleaner. Plus, if your business ever gets sued, your personal assets will be more protected.