How to Form a South Carolina LLC

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South Carolina LLC Quick Facts

South Carolina LLC Costs

Initial LLC Filing Fee:

Online Filing – $125

By Mail – $110

LLC Processing Time

Online Filing – 1-2 business days

By Mail – Up to 2 weeks

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Quick Reference

The Limited Liability Company (LLC) is a popular business entity choice structure for many businesses starting in South Carolina.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in South Carolina without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Costs to Start an LLC in South Carolina

To form a Limited Liability Company in South Carolina, file the Articles of Organization with the South Carolina Secretary of State.  The LLC filing fee is $125 when filing online and $110 when filing by mail.

Approval for the LLC is typically around 1-2 business days when filing online and less than 2 weeks when filing by mail.

Guide to Forming a South Carolina LLC

The steps for filing online or by mail are largely the same.  The screenshots show how to file online.

How to Form an LLC in South Carolina

Step 1: Business Name Search

First, we search the Secretary of State’s database to see if the name we want to use is available.  You can also check South Carolina LLC name availability before going through the filing process to ensure the one you want is available.  The reason for this search is that the name of the LLC also has to differ from other entity names registered with the Secretary of State.

Enter the name you want to search for and click “Search” to see if the name has been reserved.  If the name is available, a message comes up that says, “This name is available” If you get that message, click on the “Add New Entity” button.

Before settling on a name, you may want to do a domain name (sometimes referred to as a URL) search to try and match your business name and website address.

If there is a name you want, but are not ready to register the LLC, you can file the Application to Reserve a Limited Liability Company Name. The name reservation will hold a name for up to 180 days, at a cost of $25. Submit two copies of your completed form to:
Secretary of State,
Attn: Corporate Filings
1205 Pendleton Street, Suite 525
Columbia, SC 29201

South Carolina LLC Name Search

Step 2: Form Selection

Is the organization a South Carolina entity? – If you are filing an LLC for the first time and located in South Carolina, you will generally select “Domestic Entity.”   If the LLC was formed in another state and wanting to do business in South Carolina, select “Foreign Entity.”

Choose a business type to see a list of forms – Open the drop-down menu and select “Limited Liability Company.”

Available Forms – Select the Start Filing button for “Articles of Organization” to form a new LLC.

SC LLC Form Selection - Domestic Entity

Step 3: Contact Information

Enter the contact information for the person filing the Articles of Organization.

Step 4: New Entity Name

The LLC name you checked earlier will automatically fill this field.  Enter the name exactly as you like and enter one of the following words or abbreviations as the corporate ending.  This ending describes the type of business entity. Available endings include:

  • Limited Liability Company
  • Limited Company
  • LLC
  • L.L.C.
  • LC
  • L.C.
  • Ltd. Co.

A comma may be used after the business name and before the corporate ending.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

South Carolina LLC Name Registration

Step 5: Registered Agent Information

To have an LLC in South Carolina, a Registered Agent must be identified.  The Registered Agent can either be a resident of South Carolina or a Registered Agent service.  The agent must have a physical address in the state (PO Boxes are not allowed), be available during normal business hours, and act as a central point of contact for service of process to receive legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or are still employed and don’t want their employer to find out.  Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

South Carolina LLC Registered Agent

Step 6: Initial Designated Office

Enter the street address, city, state, and zip code of the initial designated office.  This address can be the LLC’s physical address, or it can be the address where the business records are stored.  The initial office has to be an address in South Carolina but can not be a PO Box.

SC LLC Initial Designated Office

Step 7: Management

This section is asking whether the LLC is Member-Managed or Manager-Managed.

  • Member-Managed LLCs have an active involvement in the management of the LLC.
  • Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation.

Most LLCs are member-managed and would not check the box.

South Carolina LLC Manager or Member-Managed

Step 8: Member(s) Liable for its Debts?

Most filers skip this step, but if one or more of the members will be liable for the debts and obligations of the LLC, check the box.

South Carolina LLC Members Liable for Debts

Step 9: Company Term

In this section, you can indicate how long the LLC will remain in existence.  Most LLCs will choose a Perpetual duration and skip this step; however, some businesses (usually investment-related) will have a specific closure date.  If you have a specific end date in mind, click the “Term Company” box and enter the date.

SC LLC Term Company

Step 10: Delayed Effective Date

If you want the LLC to start immediately as most filers will, leave this step blank.  If you want to LLC to start later, enter a date less than 90 days in the future to start.  The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year, and the business isn’t going to have any activity until the start of the year.  By delaying until the following year, they will reduce the number of end-of-year filings.

South Carolina LLC Delayed Effective Date

Step 11: Organizer Information

An LLC Organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any of the initial members can be listed as an organizer.

Only one organizer is required, but more can be listed if desired.

Last, either an organizer or filer must select the drop-down menu for the “Who is signing this form” question.

South Carolina LLC Organizers

Step 12: Summary of Forms

An LLC that plans to elect corporation tax status will need to file form CL-1.  If the LLC plans to be taxed like a disregarded entity (sole proprietorship) or partnership can continue.  The tax status will be filed with the IRS when the EIN is filed.  By default, single-member LLCs are taxed like a sole proprietorship while multi-member LLCs are taxed like partnerships.

South Carolina CL-1 Form

Step 13: Pay and File

If certified documents are required, check the boxes for “Certificate of Existence” or the “Articles of Organization.”  Non-certified documents will be available once the entity is filed.  Certified documents can be obtained at any time in the future.

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a South Carolina LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: South Carolina operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax Identification Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, build business credit, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corp, may be detrimental for some people due to double taxation.

Also note that while there is no annual report, if your LLC elects to be taxed as a C corp or S corp, Form CL-1 (Initial Report of Corporations will be due within 60 days of the LLC being formed and will have a fee of $25. Every year thereafter on the 15th day on the third month after the close of the taxable year (March 15 for most LLCs), Form SC 1120 or Form SC 1120 will be due as well.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Depending on the age of the LLC, a South Carolina Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start. More information about city, county, and state business licenses are available on the South Carolina Business One Stop website.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Retail License – In order to sell products and certain services and collect sales tax, registration with the South Carolina Department of Revenue will be necessary.
  • Unemployment Insurance Registration – Businesses with employees will need to register with the South Carolina Department of Employment and Workforce to register for unemployment insurance.

Related: What Business Licenses are Needed in South Carolina?