You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees — before you sell a single product, there are startup costs associated with launching an LLC in South Carolina.
Make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common South Carolina startup fees here.
✔ Start Your LLC For Free
As a business owner, you have so much to think about. Let an LLC service take care of the formation paperwork so you can sleep easy knowing everything is totally taken care of.
ZenBusiness has formed over 300,000 businesses, is reliable, fast and free when you use our special discount. Not to mention $79 less than LegalZoom!
Overall South Carolina LLC Formation Costs
LLC Name Reservation Fee
Here’s the deal: you don’t need to reserve a business name. It isn’t a required step in the LLC formation process. That said, it’s incredibly helpful if you have a great name in mind but aren’t ready to start your business. An application, plus the $25 fee, will get you 120 days of exclusive rights to your name. You can skip this step, though, if you’re ready to start your LLC because filing the Articles of Organization will automatically register your name.
To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.
Whether you reserve your business name or not, you should always perform a South Carolina business name search to make sure the name you want is available.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your South Carolina LLC. It will set you back $110, but because your LLC technically doesn’t exist until you file the Articles of Organization, it’s $110 well spent. Once you’ve submitted this form online or by mail to the Secretary of State, you won’t have to file it or pay the fee again.
The information required to file the Articles of Organization includes your LLC’s official business name, your LLC’s business address, the name and address of your agent for service of process, the names and addresses of your LLC’s organizers, an indication of your LLC’s intended duration (if applicable), an indication that your LLC will be managed by a manager instead of by its members (if applicable), the names and addresses of your LLC’s managers (if applicable), the effective date of your LLC’s formation, the date, and your LLC organizer’s signature.
Business and Professional Licenses
Even after you have filed your Articles of Organization, your LLC might need to obtain licenses before doing business in South Carolina. Certain business types must apply for licenses with state agencies, and certain cities and/or counties have their own licensure requirements.
For example, real estate appraisers must acquire a license from the South Carolina Real Estate Appraisers Board, and CPAs from the Board of Accountancy. Costs vary depending on the agency and business type. Check with the South Carolina Department of Labor, Licensing and Regulation and your local government to see which ones your LLC might need.
What are some of the most commonly required business licenses for South Carolina LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.
LLC Formation Service
Starting an LLC in South Carolina can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC creation service. These services take care of the registration process for you, so you don’t have to spend time on research, paperwork, and filings.
Most of these services (like ZenBusiness or Northwest) offer basic LLC formation services like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, operating agreements, and expedited filing.
Registered Agent Service
Appointing a South Carolina registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with South Carolina business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer. When you start your search, you might be intimidated by the sheer number of qualified lawyers out there. How can you be sure that you’re choosing the right one? Using a site like Avvo can help. On Avvo, you can search, compare, and evaluate an entire database of South Carolina business attorneys so you can be confident that you’re getting a good fit.
If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in South Carolina. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into South Carolina. If this is your LLC, don’t file the Articles of Organization. Foreign LLCs must file the “Application for a Certificate of Authority” instead.
All foreign business entities are required to foreign qualify in South Carolina, or they could incur some pretty severe penalties. You can foreign qualify online or using a paper form, but either method will cost $110, just like the Articles of Organization. As long as the Secretary of State accepts your application, you won’t need to submit this filing or payment again for the life of your business.
LLC Annual Fees
Many states require their businesses to complete annual or biennial reports to keep their records current, but South Carolina annual reports are not required. This means you won’t need to worry about meeting a deadline and paying a fee each year. Since you won’t be updating the Secretary of State using an annual report, you should make sure to notify them of registered agent or office changes or amendments to your formation documents; otherwise, you’ll run into fines and penalties.
By default, LLCs are classified as “pass-through” entities by the federal and state governments, which means that they aren’t required to file separate corporate tax returns. Instead, individual LLC owners and/or members report income and losses on their personal returns. Plus, South Carolina doesn’t impose a “franchise” or “privilege” tax on its businesses.
But you’re not off the hook just yet. There are certain circumstances that will require your LLC to pay particular, business-related taxes. Does your LLC sell merchandise? If so, it will owe a Sales/Use Tax. Does it have employees? It will need to pay a Withholding Tax and an Unemployment Insurance Tax. Register for the Sales and Withholding taxes here, and the Unemployment Insurance Tax here.
If you’ve set up your LLC to be taxed as a corporation, it will need to file an income tax return and pay the flat 5% corporate income tax.
What if I Don’t Pay?
Want to form an LLC for free? ZenBusiness will file all LLC formation paperwork for $0 + state fee (normally $49 + state fee). No catch, just savings.
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
Skipping the Articles of Organization or Application for Certificate of Authority will disallow you from doing business in the state. Fail to keep the Secretary of State updated on registered agent, registered office, or other business changes and your LLC will lose its good standing with the state. Without good standing, you cannot foreign qualify in most other states, apply for business loans, renew some professional licenses, and more. Or, your LLC can be administratively dissolved, which means it will not be able to do business any longer.
If you miss a tax payment, 0.5% of the tax due will be added to the amount for each month it is overdue (up to 25%). Learn more on the Department of Revenue website.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in South Carolina.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with maintenance fees like registered agent changes so your business doesn’t fall out of good standing.
Key Steps for Starting a South Carolina LLC
- The first step to forming a South Carolina LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
- Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in South Carolina, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
- The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $110 fee. Once the state processes this document, your LLC will be officially open for business!
- That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for South Carolina LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
- You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
- Next, you’ll need to register for any relevant taxes with the South Carolina Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.
Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of South Carolina!
Key Steps for Maintaining a South Carolina LLC
After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.
You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.
As we already mentioned, annual reports are not a key component of LLC maintenance in this state. However, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.
Frequently Asked Questions
Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in South Carolina.
What are the state business tax rates in South Carolina?
If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 0% and 7%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay South Carolina’s 5% corporate income tax on your business revenue.
How quickly does South Carolina process LLC formations?
The Secretary of State should be able to process your LLC’s formation within 24 hours if you file online. Documents submitted on paper forms will take roughly 2-3 business days.
How many small businesses are there in South Carolina today?
The state of South Carolina is home to more than 430,000 small businesses. Entrepreneurs of all backgrounds and business types find that South Carolina is a great place to own and operate a small business.
What are the top small business resources and websites in South Carolina?
The South Carolina chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for South Carolina LLCs. The U.S. Small Business Administration’s South Carolina District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.
Should I form my LLC in South Carolina, or choose a state like Delaware or Wyoming?
Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.
However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.