Starting a new business can be an exciting time — but it also comes with a lot of paperwork. Figuring out the proper way to form your business by meeting all legal requirements is an important step you’ll need to understand before you can be up and running in South Carolina. For many new small business owners, forming a South Carolina limited liability company (LLC) can be the springboard to success.
Making sure you register your business properly can seem overwhelming at first, but ZenBusiness can help. Not only can we make your business official with our formation services, but our supporting services also give you the tools to manage and grow your business with confidence. Let’s take a closer look at forming a South Caroline LLC.
To officially launch your LLC, you’ll need to register it with the South Carolina Secretary of State by filing Articles of Organization. But first, there are a few decisions you need to make.
Step 1: Name Your South Carolina LLC
First, decide on a name for your LLC. Your company’s name is important — it’s part of your brand and should be able to communicate quickly the products or services you offer, be easy to remember or distinct, and, most importantly, follow LLC naming restrictions in South Carolina.
If you have a name in mind, you’ll need to do some searching to ensure the name you’ve chosen is available. The state has its own name search tool, but if you’re having trouble finding or using it, never fear. We’ve put together a guide on how to conduct an entity search in South Carolina.
You’re also required to add a designator to your official business name. This means adding a suffix such as “LLC” or “Limited Liability Co.” to the end of your new business name.
Here’s a full list of available LLC designators you can choose from:
- Limited Liability Company
- Limited Company
- Ltd. Liability Company
- Limited Liability Co.
- Ltd. Liability Co.
If you’ve find the right name but aren’t quite ready to file, you have the option of reserving it for up to 120 days. Our business name reservation service takes care of securing your LLC name, and as part of the service, we also check to see if the name is available.
When you’re coming up with a business name, it’s wise to consider whether you can secure a matching domain name so that any future website can be easily found. We have a tool to help you do a preliminary domain name search, and our domain name registration service can help you secure the online name that will best serve your LLC’s needs.
If the name you pick doesn’t exactly reflect your business goals, you can also use our DBA service. A DBA (“Doing Business As”) registration allows you to operate your LLC under a different name that’s on your formation paperwork. So if the name you want is already taken, don’t worry. Use our DBA service to remove this roadblock and keep moving forward in forming your LLC.
Step 2: Appoint a Registered Agent in South Carolina
Now that your LLC name is ready to go, your next step is to choose a registered agent. In South Carolina, you’re required to assign a registered agent for service of process. A registered agent can be an individual agent or a qualified business entity. They must have a physical office in South Carolina where they’re available during normal business hours. P.O. boxes are not acceptable street addresses.
In South Carolina, business owners are allowed to act as their own registered agent; however, there are many reasons why this might not be a good idea. Instead, consider hiring a commercial registered agent. The benefits are:
- Discreet receipt of legal notices (as opposed to being served a lawsuit in front of a client)
- Ability to move your office location without having to update your registered agent address with the state
- Freedom to leave the office, as the registered agent must be present at the office during all normal business hours
Luckily, ZenBusiness can help here as well. Our South Carolina registered agent partners can fulfill this requirement and give you the peace of mind to keep doing what you love, growing your business.
Step 3: File South Carolina Articles of Organization
Once you have decided on a name and a registered agent assigned, you can officially register your business with the state. To do this, you’ll need to file Articles of Organization. You’ll need the following information:
- Your LLC’s official name. This is your LLC’s official name (including the LLC designation you chose).
- Your LLC’s address. This is your LLC’s office or operating address. If you do not have an office, you can use your personal address.
- Your registered agent’s name and address. This is your registered agent’s legal name and operating address (which must be located in South Carolina).
- List of organizers. This is where you’ll fill out the names and addresses of any other organizers or LLC partners.
- Company terms. You’ll check the “term company” box if your LLC partners have decided that the LLC will exist only for a set period of time. If you want the LLC to go on indefinitely, don’t check the box.
- Your LLC management structure. Some LLCs are run by LLC members, and others are run by manager(s) who are appointed by the members. Check this box if your company will be run by manager(s) and provide their names and addresses.
- Your LLC liability. You’ll check this box if one or more of your members/partners has decided to be legally obligated for the company’s debts. Most people leave this section blank, as protection from liability is one of the main reasons to have an LLC.
- Effective date. This is the date you want your LLC to go into effect. Leave this blank if you want the LLC to become effective immediately upon approval.
- Organizer signatures. This is where you and all other members will sign.
We know that filing official government documents like this can be intimidating. With our business formation plans, our team can handle the filing for you to make sure it’s done quickly and correctly the first time. Once the state approves your LLC your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized. For more comprehensive business organization, one of our customized business kit can help you keep these important documents organized and looking professional.
Another thing to consider is your business address. If you are running you business from home, you might not want to give out your address to just anyone. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy. With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary.
Step 4: Create an Operating Agreement
Next, you’ll want to create an operating greement for your LLC. A South Carolina operating agreement is not a required legal document to conduct business in South Carolina; however, it is strongly recommended. Your company’s operating agreement will detail how your LLC is managed and run, from financial processes to member voting structures and managing employees.
Even if you’re the only member of your LLC, it can be a good idea to create an operating agreement. This document can protect your LLC if you can’t run your business for whatever reason. If you don’t have an agreement, your LLC will by default be run according to South Carolina law, which might not be the best strategy for your company.
Here are a few other key reasons why you’ll want to create an operating agreement:
- An operating agreement can help further establish that your personal finances are separate from the company’s finances, debts, and liabilities if there are ever any legal issues.
- An operating agreement helps you quickly resolve conflicts (especially between partners) by following the management plans outlined within the document.
- An operating agreement allows new partners, investors, and managers to understand how the company operates before making any commitments.
If you’re unsure as to how to start creating an operating agreement for your South Carolina LLC, we offer a customizable template to help get you started.
Step 5: Apply for an EIN
Congratulations! You’ve officially registered your LLC in South Carolina! While this is an exciting step, there’s still more to finalize before the setup process is complete.
Next, you’ll want to register your new LLC with the Internal Revenue Service (IRS) online. This will get you set up to pay taxes, among other things. This means registering for an Employer Identification Number (EIN). This Federal Tax Identification Number essentially your business’s Social Security number. This number will allow your LLC to file taxes, open business bank accounts, hire employees and contractors, and much more.
If your LLC consists of one member with no employees, you may not be required to register for an EIN, but doing so has benefits for your business. By registering for an EIN, you’ll make it even easier to separate your business taxes from your personal taxes and assets. If you need help obtaining one, use our EIN service and we’ll take care of it for you.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities.
We also offer a discounted bank account for your new business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, try the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.
After this step, the last thing you’ll want to do is check to see if you need any special permits or licenses to operate your LLC in South Carolina. Requirements for permits vary by state and industry. In South Carolina, counties have different requirements, so you’ll need to follow the state’s online process to determine if you’re required to obtain additional permits or licenses. Beyond this website, though, you could still require other federal, state, local, and industry-specific licensing, so you’ll need to do some research or use our business license report and let us do the research for you.
South Carolina LLC FAQs
How much does it cost to start an LLC in South Carolina?
Starting an LLC always comes with costs. Formation expenses will vary, but you can expect to spend a few hundred dollars. Keep in mind that this does not cover any special licenses or permits, rush requests, consultation fees, or employee expenses.
You can get help with the steps mentioned above from the experienced team at ZenBusiness. We offer business formation packages that include administrative services your LLC will need, from providing an operating agreement template and filing your LLC paperwork to providing registered agent services.
What are the benefits of an LLC in South Carolina?
Many entrepreneurs decide to form an LLC for a reason. There are several benefits and legal protections that this type of business structure offers. Here are a few reasons why forming an LLC in South Carolina might make sense for you:
- You want a clear separation between your business finances and personal assets. LLCs make it easy to delineate between business and personal profits, debts, and liabilities.
- You want flexibility in how your company is run. While corporations have rigid rules to follow, LLCs have more flexibility to manage their company as they see fit, with fewer regulations to follow.
- You want to avoid double taxation. LLCs are exempt from double taxation, which means you’ll only pay taxes on your personal LLC profits when filing your individual taxes.
- You want fewer reporting requirements. LLCs do not have as many reporting requirements as corporations.
How is a South Carolina LLC taxed?
On the federal level, single-member LLCs default to a sole proprietorship tax election, while mult-member LLCs default to a partnership election. Both are pass-through entities, but this always the most advantageous tax situation. Luckily, LLCs can opt for a corporation tax designation as well, and can choose regular double taxation as a C corporation, or opt for an S corporation, which also avoids double taxation.
Whether you have an EIN or not, you’ll be responsible for paying taxes. While these taxes are due by the tax filing date each year, you should make quarterly payments to avoid tax penalties. You will need to do this for your South Carolina taxes and federal taxes. If you have employees, you’ll also need to withhold taxes from their paychecks.
Taxes are complicated, and you want to make sure you do them right. If you’re looking for help, take a look at our free accounting assessment available in one of our many business formation packages.
What is the processing time to form my South Carolina LLC?
When you file your South Carolina Articles of Organization online, your request is typically processed right away and active in 24 hours. When mailing your Articles of Organization, the process can take two to three business days or longer, depending on the number of requests in the pipeline.
Do I need to file an operating agreement with the state of South Carolina?
No, South Carolina does not require you to file an operating agreement to register your LLC.
What tax structure should I choose for my South Carolina LLC?
Most LLC owners allow their business to be taxed the default way, which is as a sole proprietorship (for single-member LLCs) or a partnership (for multi-member LLCs). This method requires only that members pay taxes on their percentage of the profits on their personal tax returns. The LLC business entity does not pay taxes on profits. You can also opt to be taxed as a C corporation or an S corporation if your LLC has high earnings or is a large business. You’ll want to understand all of the distinctions the IRS makes between filing as an LLC and a corporation before making this decision. You can learn more about the difference in our corporation tax guide, but we also encourage you to check with an experienced tax specialist.
Does South Carolina allow a Series LLC?
In South Carolina, you are not allowed to form a Series LLC. A Series LLC is the terminology given to a grouping of LLCs, where a “parent” LLC has several “child” companies underneath it. Many states do not allow you to form this type of company.
Which licenses and insurance are required for an LLC in South Carolina?
You do not need a general business license for your LLC to operate in South Carolina. However, depending on your industry, you might need to obtain a special permit. Many permits are determined at the county level, so be sure to read through the South Carolina Licenses, Permits, and Registration tabs to learn more about your LLC’s requirements. If you’d like assistance determining which permits, licenses, and insurance you need to stay compliant, we recommend working with a ZenBusiness professional who can provide you with a package containing the information you’ll need to stay compliant in South Carolina.