Forming an LLC in South Carolina
The business structure that you choose for your new business is essential. Deciding to form an LLC will impact taxes, daily operations, and how much of your personal assets are at risk. Before taking a step in that direction, you should make sure that you know all of the requirements for forming an LLC in South Carolina.
Benefits of Forming a South Carolina LLC
An LLC or "limited liability company" has aspects of both corporations and partnerships. An LLC offers tax advantages in the same way that a partnership does. Still, it also offers owners protection against personal liability for the company's debts and judgments similar to that of a corporation.
Steps for Forming an LLC in South Carolina
Step 1: Name Your LLC
If you haven't already begun thinking about business names, it's a significant first step to take to get your business up and running. Take some time to sit down and brainstorm. Come up with a few names that you feel will attract potential customers and stand out amongst the competition.
Next, you'll need to consider the state LLC laws. Under Section 33-44-105 of the South Carolina Code, the name that you choose for your LLC must be distinguishable from all other business names registered or reserved with the state. This means that you must pick an LLC name that is unique and different from the business names that are already on record. To make sure that the name you settle on for your business is unique, you'll need to perform a name search through the South Carolina Business Entities Database. If you find that a name you liked is already taken, you'll need to go with a different name.
Also, note that you'll have to include one of the following phrases or abbreviations in your LLC name:
- Limited Liability Company
- Limited Company
Step 2: Get a Registered Agent
You'll need to have a registered agent for service of process in South Carolina. Registered agents accept legal papers on behalf of a company when there's a lawsuit. To comply with the requirements of South Carolina law, your South Carolina registered agent:
Must have a physical street address in South Carolina; and
May be a South Carolina resident; or
A business entity authorized to do business in South Carolina.
Also, note that your registered agent needs to be available during regular business hours. Some entrepreneurs choose to use a registered agent service to fulfill the legal requirements under South Carolina law.
Step 3: File Your Articles of Organization
You'll need to file South Carolina Articles of Organization to officially form your LLC. You can file online or download the form and submit it by mail. The filing fee for South Carolina Articles of Organization is $125 for online filings and $110 for filings by mail.
- Your LLC Articles of Organization should contain:
- The LLC's name and address
- The registered agent's name and address
- The name and address of every LLC organizer
- Whether the LLC is member-managed or manager-managed
Step 4: Draft an Operating Agreement
LLC operating agreements are essential documents even though they're not filed with the state. Your operating agreement should address topics such as: voting powers, ownership of the LLC, admission of new members to the LLC, dissolution, and the distribution of profits and losses.
Step 5: Get an EIN
An EIN (Employer Identification Number) or Tax ID number is a number that identifies your business (similar to a social security number). The IRS (Internal Revenue Service) supplies these numbers. It's easy and free to get one, and you'll likely need one to open a business bank account and hire new employees. Apply for your EIN online or by mail.
Step 6: Open a Business Bank Account
You'll need to open a business bank account to keep your personal and business funds separate. If you don't maintain this separation between your personal and business funds, you could lose your liability protection. Get a credit card and debit card for your business, as well. It'll make things easier when you prepare to do your taxes and handle the accounting.
Frequently Asked Questions About South Carolina LLC Formation
1. How much does forming an LLC in South Carolina cost?
It costs $110-$125 to file Articles of Organization in South Carolina.
2. Do I have to keep up with annual requirements for my South Carolina LLC?
Many LLCs in South Carolina won't have to file an annual report. However, if you elect taxation as a corporation, then you should check with the South Carolina Department of Revenue about filing requirements for your company.
3. Are business licenses and permits required for LLCs in South Carolina?
You may have to get a license or permit to do business in South Carolina, depending on the location of your business and the type of business you're running. You should check with state and local government offices to ensure that you comply with the law.
Note: State laws are always subject to change through new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.
If You Need Help Forming an LLC in South Carolina, Contact an Attorney
Fortunately, forming an LLC in South Carolina is generally easy after you have obtained the forms. However, if your situation is unique or you have a specific formation issue that you can't handle, don't delay getting help. Contact a qualified business organizations attorney near you today.
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