If you’re looking for a reliable DIY guide for starting an LLC in South Carolina, look no further. Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.
That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire an LLC formation service – they’ll take care of the paperwork so you can spend more time growing your business.
Recommended: Compare the Top LLC Services
If you’re new to the process of starting an LLC, you might also be unfamiliar with the LLC formation services that are reliable and offer great value – like ZenBusiness. As a reference point we compared them to the two most well known LLC formation services, IncFile and LegalZoom. See our comparison guides for more information:
Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your South Carolina LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain state requirements that it must follow.
Your name must indicate the business’ status as a limited liability company, so it must include the terms “Limited Liability Company,” “Limited Company,” “L.L.C.,” “LLC,” “L.C.,” “LC,” or “Ltd. Co.” It won’t be considered valid, though, unless it’s wholly distinguishable and unique among every other South Carolina business name.
But what makes a name distinguishable? Distinctions in the following name components typically are NOT enough:
- Designators like LLC, Ltd., Inc., or LP
- Articles (“a,” “an,” or “the”)
- Conjunctions (like “and,” “but,” and “or”)
- Special Characters
So, if your name is already taken and you need to distinguish it, you must make changes to its keywords, either adding, removing, or rearranging them.
Consider this: your friend Fanny wants to open a flower shop in Greenville, South Carolina. The name she is considering, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of State’s records.
Determine the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Articles of Organization without first confirming it’s available. Use the Secretary of State’s Business Name Search to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in South Carolina for a total of 120 days.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold online through the Business Entities Online Portal, or by mailing or hand-delivering an “Application to Reserve and LLC Name,” to:
Secretary of State
Attn: Corporate Filings
1205 Pendleton Street Suite 525
Columbia, SC 29201
Both filing methods come with a $10 fee, and if you file by mail, include a self-addressed stamped envelope. Standard processing time is 2-3 business days, although it can take longer during peak filing times.
You only need to reserve your name if you’re not ready to start your business. Otherwise, simply including it on your Articles of Organization will register it with the Secretary of State.
Step 2: Choose a Registered Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in South Carolina, she’ll need a go-between for state and legal communications. This is called the registered agent.
A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. But maintaining an agent isn’t just a convenience, it’s required. According to South Carolina’s LLC Act, all LLCs must “designate and continuously maintain […] an office, which need not be a place of business in this State; and an agent and street address of the agent for service of process on the company.” And the Secretary of State website describes this agent as “the person authorized to accept service of process or other legal documents for another person.”
Taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside South Carolina.
Now for the practical application, the “how-to.” Once you have a registered agent in mind who has agreed to take the position, include their name, address, and signature on your Articles of Organization. This will put that information on your company’s public record.
Individual as Registered Agent
You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are a South Carolina resident and have a physical address in the state (no P.O. boxes).
You or one of your LLC’s members may take on the position – as long as you meet the requirements – although sometimes using a third party like an attorney, accountant, or business consultant can outsource the agent responsibilities to a trustworthy professional.
Registered Agent Service
It can be a lot easier, though, to use an LLC formation service like IncFile or Northwest Registered Agent, so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your South Carolina LLC on your own, you can use a national registered agent service to cover your agent duties.
During the life of your LLC you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the State
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the South Carolina Secretary of State, giving it the authorization to commence business in the state.
When you’re ready, you can file the Articles of Organization online, by mail, or in person. So, whether you like the ease of digital filing or the reliability of a paper form, there’s an option for you, so choose the one that works best for your LLC. All three options cost $110.
This is the quickest way to file, so if you’re in a hurry, use the Online Business Filings system. Your application will be processed within 24 hours.
Download the paper application and fill it out. Then, send the original, two copies, a self-addressed stamped envelope, and your payment to:
South Carolina Secretary of State’s Office
Attn: Corporate Filings
1205 Pendleton Street, Suite 525
Columbia, SC 29201
Typical processing time for hard copies is 2-3 business days.
If you live in Columbia, you can hand-deliver the materials above to the same address.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
No South Carolina laws exist that require your LLC to adopt an operating agreement. Even so, creating an agreement, which essentially serves as your bylaws, gives your LLC a crucial procedural foundation and a safety net in the case of legal disputes. This document also legitimizes your business to courts, banks, and the government, so it’s in your LLC’s best interest to draft one.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to tax structure.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend this one, courtesy of Northwest Registered Agent. It’s got everything you need to draft a solid agreement.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Articles of Organization, designated a registered agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a South Carolina LLC running smoothly and in good standing with the state.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
Similar to federal income taxes, state income taxes will “pass-through” to the LLC’s owners’ personal returns, so you won’t need to file a corporate return. And unlike some other states, South Carolina does not require it’s businesses to pay a franchise tax or privilege tax. So, most of your state taxes are fairly simple, but this doesn’t mean your LLC won’t owe anything.
There are a few business-related taxes that your LLC might need to pay online under certain conditions. Do you sell merchandise? If so, your business will be subject to Sales and Use Taxes. And if you hire employees, it will need to pay a Withholding Tax. Register for all three of these taxes through South Carolina’s online Business Tax Registration, or by using paper applications, found here and here.
Any LLC with employees will also owe an Unemployment Insurance Tax through the Department of Employment and Workforce.
Plus, depending on your LLC’s location, it may owe a local tax to its city, municipality, or county. Consult your local government’s website to find out.
The Articles of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.
For example, real estate brokers must obtain licensure through the state’s Real Estate Commission. And if our friend Fanny wanted to start offering massage therapy out of her flower shop, she would need to apply for a license through the South Carolina Massage/Bodywork Panel. For a full list of business and professional licenses, visit the Department of Labor, Licensing and Regulation website.
Certain cities and counties require their own specific licenses on top of any state ones, so you should also check with your local government.
Some states require business entities to submit Annual Reports to update their information, but South Carolina is not one of them, so you won’t need to remember this yearly filing.
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your South Carolina LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC formation service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a registered agent.
Sound good? Whether you know that you’ll need an LLC service or you’re just exploring your options, take a look at IncFile and Northwest Registered Agent. These are two of the top services available. And you can take our word for it because we’ve done a whole lot of research on the topic.