Wondering how to form an LLC In SC? The most crucial decision that the founders must make when beginning a new company is deciding on a business entity. For a variety of reasons, forming an LLC is often the best option for most enterprises with more than one leading member.
For many firms starting in South Carolina, the Limited Liability Company (LLC) is a common corporate entity structure. The LLC protects you from personal liability and may help you save money on taxes. You may incorporate an LLC in South Carolina without getting a lawyer with a little research.
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Unlike a partnership or sole proprietorship, where the small business owner can be held personally accountable for claims brought against the company, an LLC is a separate legal entity that protects the owner’s personal assets. If you want to get more information on how to start an LLC in any state, you can read our complete guide on How To Form An LLC.
Because of the many tax alternatives, ease of administration, and management flexibility, the Limited Liability Company outperforms the sole proprietorship, partnership, and corporation in terms of liability protection.
If you are looking at how to start an LLC in South Carolina? This step-by-step guide to forming an LLC in South Carolina includes instructions on how to file formation documents, receive tax IDs, and set up business records. Before you take that step, be sure you’re familiar with all of the requirements for incorporating an LLC in South Carolina.
Before we start, here are the top picks for LLC filing services in South Carolina:
What Are The Benefits Of An LLC In South Carolina?
- In the regular course of business, LLC owners are not personally responsible for business debts or lawsuits.
- A limited liability company (LLC) is easier to form and run than a corporation.
- The members of an LLC can choose whether the company is taxed as a pass-through company or as a corporation.
- The cost of forming an LLC in South Carolina is lower than the national average.
Over the last decade, South Carolina’s economy has grown tremendously. If you are planning to open a startup company in South Carolina your business can grow and expand as it has a business-friendly climate and offers benefits similar to that of a corporation, protecting owners from personal responsibility and accountability for the business’s debts and lawsuits. Let’s get started with how to set up an LLC South Carolina.
Let’s look at the advantages of forming an LLC in North Carolina:
1. Pass-through taxation
If you form a new company as an S corporation in South Carolina, the company or firm will not have to pay any taxes. Instead, the corporation’s profit or loss will be distributed to its stockholders. Earnings are taxed before being dispersed to owners, and profits are taxed again when owners declare their part of the profits on their personal tax returns.
2. Limited Liability Protection
“Personal liability protection” is one of the most significant benefits of forming a South Carolina LLC. As the proprietor of an LLC, you will not be held personally liable for any of the company’s debts. Your personal assets, such as your automobile, property, and bank accounts, will be protected from LLC creditors.
3. Independent life
When you set up a new business as a Corporation in South Carolina, it will be self-contained. This means that a stockholder’s incapacity or death would not have a serious effect on the company’s activities.
4. Tax Options
A limited liability business (LLC) can pay income tax in one of three ways. Being taxed as an S company is one alternative. An S corporation is a tax structure, not a specific sort of corporate entity.
5. Increased Credibility
Incorporating a limited liability company (LLC) gives your company more legitimacy. A limited liability company (LLC) is considered a more corporate management structure than a sole privately owned company. Customers and partners will recognize you as a respectable company if you include LLCs in your company.
6. Ownership Flexibility
There are limited constraints on how you can arrange the management and ownership of an LLC in South Carolina:
- You can form a single-member LLC or a multi-member LLC.
- Members can control a Multi-Member LLC, which is referred to as member-managed.
- Manager-managed LLCs are those that are controlled by a manager who is appointed by the members.
Limited liability businesses in South Carolina are simple to start and maintain, requiring minimal paperwork and cost. LLCs, unlike C companies, are not obliged to designate formal officer responsibilities, have annual meetings, adopt bylaws, or keep track of business records and decisions.
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Disadvantages Of Forming An LLC In South Carolina
- Members of LLCs must pay a high level of federal self-employment taxes
- South Carolina LLCs requires to pay a substantial yearly fee
- Starting an LLC is more expensive than starting a sole proprietorship or a partnership
There are various disadvantages while forming an LLC In South Carolina, which include the following:
- Since LLCs, like sole proprietorships, are pass-through businesses, LLC owners must pay taxes on their portion of the LLC’s net income, whether or not they get a payout.
- Running a sole proprietorship may be less expensive
- Businesses that need to carry large amounts of profit from tax year to tax year should consider a corporation.
Steps For How To Start An LLC In South Carolina
South Carolina’s LLC formation process is similar to that of most other states, so entrepreneurs shouldn’t have too much trouble beginning a firm in the state. A South Carolina LLC combines a corporation’s limited liability with a partnership’s or sole proprietorship’s flexibility and lack of formality. Let’s get started with how to form an LLC in South Carolina.
Here are the steps you need to take to form an LLC in South Carolina which will get you started today:
1. Choose A Name For Your South Carolina LLC
The first step in forming an LLC in South Carolina is deciding on a name. You won’t be able to proceed without a name because it will appear on all of your formal formation documentation. Every LLC operating in South Carolina is required to have a distinctive name. For branding considerations, your business name should be distinctive, as well as legal. The name of your LLC must be distinct from the names of other businesses registered with the South Carolina Secretary of State. For more details check South Carolina Naming Guidelines.
If you search the company database and discover that a name is available, Montana allows you to reserve it for up to 120 days. You can register a name reservation online for $125 or send a name reservation form by mail for a charge of $110. Filling out this form ensures that the name you want will be available when you complete the other processes of incorporating an LLC in South Carolina.
The following are the Montana LLC naming guidelines:
- The phrase “limited liability corporation” or one of its derivatives must be in your name (LLC or L.L.C.)
- Your LLC’s name cannot contain any words that could be mistaken for a government department (FBI, Treasury, State Department, etc.)
- Restricted words (e.g., bank, attorney, university) may need additional paperwork and the inclusion of a licensed professional in your LLC, such as a doctor or lawyer
- Your business name must be distinct from any other limited liability company, corporation, limited liability partnership, or limited partnership in PA.
- Check Name Availability: Do a name search on the State of Montana website to be sure the name you choose isn’t already used.
- Reserve Your LLC Name: It’s a great idea to reserve your LLC name with the PA Secretary of State as it protects the name from being used by another company before your LLC is formally incorporated in the state.
2. Appoint A Registered Agent In South Carolina
Before you can legally file to form your South Carolina LLC, you’ll need to choose a registered agent in the state. Your LLC must maintain a South Carolina Registered Agent at all times in order to do business in the state. A Registered Agent in South Carolina is a person or business that receives legal mail and papers directed to your South Carolina LLC. You can act as your own registered agent or hire any professional registered agent service.
Legal documentation and tax notices will be accepted on your LLC’s behalf by your South Carolina registered agent. When you submit your Certificate of Formation, you will identify your registered agent.
A Montana registered agent must meet the following criteria such as:
- The Registered Agent for your South Carolina LLC must have a physical address in the state
- If your LLC’s Registered Agent will be a single person, he or she must be at least 18 years old and a South Carolina resident
- If a person or company is based outside of the South Carolina business office
- A designated registered agent must provide an address of a registered office in South Carolina and must be found during normal business hours
- In order to be eligible as a registered agent in South Carolina, the business must already be operating in the state when the LLC is formed.
3. File Your South Carolina LLC Articles Of Organization
In South Carolina, a limited liability company (LLC) is founded by filing Articles of Organization with the Secretary of State. The Certificate of Organization is the paperwork you’ll submit to the Department of State to formally register your LLC. When you’re ready, submit Articles of Organization to the Montana Secretary of State to formalize your LLC.
You can either file online or download and send the form. The cost of submitting Articles of Organization in South Carolina is $125 for online filings and $110 for mail filings.
The following information must be included in the Articles of Organization:
- Name of the LLC, address of the principal office, email address (optional), and phone number
- Name and address of the registered agent
- Articles that are out of date are no longer effective (if not immediate)
- Names and addresses of the Articles’ signatories
- A member’s, organizer’s, or their representative’s signature
4. Establish Company Records
Your LLC’s books and records must be accurate and comprehensive. The articles of organization you filed are the initial documents in your LLC’s file. Many more public documents will be created by your LLC, including:
- Minutes of the meeting
- Operating Agreement
- EIN Verification Letter
- Throughout the LLC’s existence, amendments and other filings are made
5. Receive a Certificate From the State
Articles of Organization are often approved quickly in South Carolina. Approval applications are only accepted online. After the LLC’s creation paperwork is filed and approved, the state will provide you with a certificate confirming the LLC’s formal existence. The materials for approval will be forwarded to your email address.
The LLC will be able to obtain an Employer Identification Number (EIN), business licenses, and a business bank account with the help of this certificate.
6. Obtain A South Carolina Business License
In order to operate in South Carolina, certain sectors will require a company registration. You may require one or more types of licenses, including:
- Licenses issued by your city or county.
- Certain skilled vocations require professional licenses.
- Environmental permits.
- Licenses for health and safety.
- Permits are required by zoning.
- Liquor licenses, for example, are regulatory permits.
- Sales tax exemptions are available.
7. Prepare South Carolina LLC Operating Agreement
Although preparing a detailed LLC operating agreement is not a legally required step for incorporating an LLC in South Carolina, it is strongly suggested for all emerging limited liability businesses. You should consider developing an operating agreement as part of your LLC strategy. The purpose of this paper is to establish how your firm will operate.
The operating agreement is the basic document that spells out the members’ rights, powers, responsibilities, debts, and obligations to one another and to the LLC. The agreement is strictly internal and has not been lodged with the Secretary of State.
If an LLC does not establish an operating agreement, the articles of organization, rules, and/or member control or limited liability company agreement will serve as the operating agreement.
The following should be included in the operating agreement:
- Define the business structure of the LLC.
- Determine each LLC member’s particular roles and obligations.
- Describe how the LLC will be managed.
An LLC may suffer substantial legal and operational challenges if it does not have an operating agreement that spells out the precise responsibilities of its members.
8. Hold The Organizational Meeting
The organizational meeting is the LLC’s initial gathering of members. To hold this meeting, you’ll need your filed articles of incorporation and your operating agreement. This meeting’s minutes should be kept and filed in your company’s record book.
9. Get A South Carolina LLC EIN
In the United States, all newly created LLCs must get an Employer Identification Number (EIN) from the Internal Revenue Service. The nine-digit EIN is a company’s equivalent of a social security number, and it’s required to pay income taxes, submit tax returns, open corporate bank accounts, and do a variety of other activities. Your South Carolina LLC’s “social security number” is a Federal Tax ID Number. For taxation and reporting purposes, the IRS uses it to identify your LLC.
You can apply for EIN online, by fax, or by mail. Federal tax ID numbers are free and don’t charge anything.
You will need an EIN number for the following:
- Open a business bank account
- Register for business licenses and permits
- Transact business with other companies
- Taxes are filed and managed at the federal and state levels
10. Comply With South Carolina Employer Obligations
In addition to the steps outlined so far, South Carolina LLCs with employees must also comply with the following requirements:
- Employers are required by state and federal law to report new employees to the Montana New Employment Reporting Program within 20 days of their hire date.
- Employers in South Carolina are required to withhold state and federal income taxes from their employee’s paychecks. Employers must remit withheld taxes to the state on a regular basis.
- Employers are liable to compensate unemployment taxes in South Carolina. Every firm is allotted a tax rate depending on its age, industry, and history of unemployment insurance claims.
- A small-business owner in North Carolina is required to acquire workers ’ compensation as soon as they recruit their first employee. Employers can self-insure or obtain workers’ compensation coverage from a private insurer or the state insurance fund.
11. Comply With Federal Requirements
In South Carolina, LLCs must follow both state and federal regulations. Most LLCs are treated as pass-through entities under federal law, just as they are in most states. On their personal income tax returns, LLC members disclose their portion of LLC income. The LLC does not have to pay federal income taxes.
An LLC’s members can choose to have it taxed as a C-corporation at the federal level, in which case the LLC will pay a flat federal corporate tax of 21%.
Important Steps After Forming The South Carolina LLC?
After registering your South Carolina LLC, you need to follow some important responsibilities. Here are some important steps you need to consider, after forming an LLC in South Carolina:
- Open a business bank account: A business bank account lets you keep personal and business costs separate, which is necessary to keep your LLC’s corporate entity intact. In the event that your LLC or business is sued, a corporate veil shields your personal assets from creditors. Also read, How To Open A US Bank Account As A Non-Resident?
- Get a business credit card: A company credit card will help you separate personal and business costs while also creating a credit record for your firm.
- Hire a business accountant: An accountant for your business can help you save money on taxes and prevent penalties and fines. Accounting and payroll are made easier with the help of an attorney.
- Get Business Insurance For South Carolina LLC: Risk management is aided by business insurance. General liability, professional liability, and workers’ compensation are the most prevalent types of business insurance.
Keep Your Company Compliant
- You need to research and get a South Carolina license and permits
- File your South Carolina annual reports statement online with the South Carolina Department of State at the end of the month in which the LLC was formed
- In the next step, you need to understand South Carolina sales tax requirements and seller’s permits
- Understand the federal tax requirements to report income to the IRS each year using Form 1065 Partnership Return
South Carolina LLC provides limited liability protection and allows pass-through taxation. Moreover, it is also less complex compared to a corporation. Other business licenses and permissions may be required depending on the company’s activity and location. Consult with local and state government entities. There’s a chance you’ll owe additional taxes. To avoid future problems, double-check that you understand all of the requirements.
Many potential business owners may have wondered how to start an LLC in South Carolina. You have to follow the multi-step procedure that includes everything from picking a name for your company to obtaining a registered agent, an operating agreement involving many members, and more.
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Are you ready to start an LLC in South Carolina? If you have any questions just leave them in the comment section below! Our experts will reach you soon!
Frequently Asked Questions (FAQs)
1. How much does it cost to get an LLC in South Carolina?
The Secretary of State in South Carolina charges $110 to submit the Articles of Organization. For $25, you can reserve the name of your LLC with the South Carolina Secretary of State.
2. Do you need a registered agent for an LLC in South Carolina?
Absolutely, with a few limitations. Most corporations and nonprofits forming or registering in South Carolina are required to have a real registered agent in the state at all times. This includes maintaining the agent’s contact information current with the Division of Business Filings of the South Carolina Secretary of State.
3. How do I get an EIN number in South Carolina?
The Internal Revenue Service provides the Federal Employer Identification Number (FEIN) (IRS). You can apply for one either online or by filling out an SS-4 and faxing it in.
4. How long does it take to get an LLC approved in South Carolina?
Online submissions are quicker than paper filings, with approvals possible on the same day or the following business day. The Articles of Organization can be filed online in 24 hours or by mail in 5 to 7 business days.
5. Should I form an LLC in South Carolina?
If you’re just getting started in business or have been working as a sole proprietor for a while, you might think about incorporating an LLC. LLCs restrict an owner’s personal liability for business debts and lawsuits, and they provide a great deal of flexibility in terms of corporate ownership, management, and taxation.
6. Do I need a business license in South Carolina?
South Carolina does not require a state-wide business license. Almost all towns and counties, however, demand that enterprises obtain a local business permit.
7. Does South Carolina tax LLCs?
South Carolina, unlike several other states, does not levy a licensing fee on its businesses. LLCs are not subject to corporate tax because they are normally taxed as “pass-through business entities”. Profits earned by LLCs are taxed as part of the owners’ personal income tax returns.
8. Do I need an operating agreement for my South Carolina LLC?
Operating agreements are not required in South Carolina, but they are strongly recommended. An operating agreement will assist protect your limited liability status, eliminate financial and management misunderstandings, and ensure that you, not state law, choose the rules that govern your organization.
9. Are there South Carolina business taxes I need to pay?
You may be required to register with the South Carolina Department of Revenue in specific circumstances, such as if you have workers or will be selling items and collecting sales tax (DOR). The South Carolina Business One Stop (SCBOS) website is a good place to start in most situations.
10. What is a Cl 1 form in South Carolina?
CL-1 is a type of CL. Domestic and international corporations must file an Initial Annual Report of Corporations with the Secretary of State. During 60 days of conducting business in this state, LLCs filing as corporations must submit Form CL-1 to SCDOR.