How to Start Your LLC in South Carolina

Linked limited liability companies help in isolating personal and business liabilities; hence, your business does not normally expose your personal property to lawsuits or debts. In addition, LLCs generally pass-through tax, and the resulting profits and losses are subject to personal taxation of the members of the entity, rather than being taxed at the corporate level, unless you otherwise.

The following is a step by step procedure of establishing LLC in South Carolina and making sure that you are operating in accordance with the state and federal laws.

1. Name Your South Carolina LLC

It is very important to select a powerful and lawful business name that will be the basis of your branding and legal identity. Begin by defining your business idea and purpose because you are going to base your name decisions on it. After you have the possible names, you can get feedback of your trusted colleagues or friends which name sounds most appropriate. An online search should also be done to make sure that the name is a domain and not in use by an industry player. Business name generators online can be a source of inspiration but not a substitute to human judgment because they may miss out on the nuances that are of importance to your industry.

Once you have narrowed your choices, you would want to take a look at the US Patent and Trademark Office (USPTO) to make sure that your name is not a federally registered trademark, as it will save you a lot of money in legal challenges had it gone national.

Address:
Secretary of State
Attn: Corporate Filings
1205 Pendleton Street, Suite 525
Columbia, SC 29201

Doing Business As (DBA)

In case you intend to do business under a different name other than your LLC, you will be required to register DBA or fictitious business name. DBAs are not registered in South Carolina on a state-wide basis; instead they are registered at the county level. The average cost is between 10-20 fees based on your county. DBAs can be applied to product line diversification or branding of different business operations in a single LLC. Remember, the DBAs cannot interfere with the registered business names, and DBAs that are recognized on the national level should be patented.

2. Choose a Registered Agent

All LLCs in South Carolina will be required to appoint a registered agent, which is any person or organization entitled to receive official legal and taxation documents on behalf of the company. The registered agent makes sure that your LLC is provided with vital documents including lawsuits, subpoena, or tax notifications in a timely manner.

The state of South Carolina has requirements that include that a registered agent be at least 18, must have a physical address in the state (P.O. Boxes are prohibited), and must be available at regular business hours. The convenience associated with hiring professional registered agent services is the reason why many LLC owners use the services because they commonly travel a lot or have more than one business. You can also act as your own registered agent as long as you match the requirements mentioned above.

3. Decide Your Management Organization

The South Carolina LLCs may be member-managed or manager-managed and the appropriate structure depends on the extent to which the owners would wish to be incorporated in the day-to-day operations.

In member-managed LLC, the owners (members) play the role of directing the day-to-day activities and decision making. It is a perfect structure with small LLCs, whose members are fully engaged in the business.

LLCs run by managers have one or more managers (who are or are not members) to conduct daily business. This structure is effective because of some members who would like to be passive investors instead of participating in the day-to-day running of the company. In case the Articles of Organization fail to indicate type of management, the state of South Carolina assumes member-managed.

4. Articles of Organization

To officially start your LLC, you have to file Articles of Organization with the Secretary of State of South Carolina. The form on the Secretary of State website is to be used to file online or by mail. Articles of Organization should contain:

• Name of LLC and the address of the principal office.
• Registered name and address of agent.
• Organizer information

Secretary of State Contact:
Phone: 803-734-2158
Website: Secretary of State in South Carolina.

5. Write an Operating Agreement

Even though South Carolina does not insist on the existence of an operating agreement, it can be very welcome. This filing instantiated the internal control of the LLC, ownership, voting rights, profit sharing and method of resolving disputes.

A good operating agreement should consist of:

• Name and address of principal and LLLC name.
• Feedbacks about members and percentages of ownerships.
• Organizational structure and management.
• Add/removal of member procedures.
• Profits/losses Allocation of profits and losses
• Dispute resolution rules and amendments.

The operating agreement is beneficial even to single-member LLC, as it gives you a stronger legal standing and makes business operations clearer. Numerous lawyers will be able to make an agreement to match the needs of your LLC, or you can use templates available online and adjust them with the help of a professional attorney.

6. Apply to receive an Employer Identification Number (EIN)

Your LLC must have more than one member or employ workers and, therefore, requires an EIN from the IRS. It acts as a Social Security number of your business and you can open a banking account, employ workers, and file tax returns.

The person in charge, which is usually a person in control of the LLC, has to offer his or her name and Social Security/ITIN number. You may apply online, via mail or fax using the IRS.

7. Acquire Business Licenses and Permits

In South Carolina, the licenses of business depending on the city, the county and the industry differ. The state does not mandate the general business license, but most municipalities offer the local license and some industries may mandate a professional license.

In case your business deals with taxable goods and services, then you have to obtain a Sales Tax License with the South Carolina Department of Revenue. Permits may also be required depending on your operations such as health and safety (OSHA), zoning, signage or fire compliance.

A business attorney or professional service may be useful in making sure that every federal, state, and local requirement is satisfied to ensure your LLC will not be fined or halt its operations.

8. Determine Your Tax Status

In South Carolina, by default, LLC is a pass-through entity, which implies that the business does not pay income taxes at all. Rather, the individuals include profits and losses on the personal tax returns of the members.

Default Tax Treatment

Single-Member LLCs are considered just like sole proprietors, where the income is taxed on the Schedule C of the tax return of the owner, where the owner is subject to self-employment taxation.

Multi-Member LLC are taxed as partnerships by default. The LLC will also file an informational return (Form 1065) and each member will report his or her profit and loss on his or her individual return.

Elections involving Optional Corporate Tax

LLCs are allowed to choose corporate taxation by submitting IRS Form 8832 (C-Corp) or Form 2553 (S-Corp). C-Corporation taxation could be beneficial, where members would like to keep the earnings in the business, but has the risk of a double taxation on dividends. S-Corporation status will enable the members to receive a decent salary that is taxable, whereas the rest of the profits that are paid out to the shareholders are not taxed with self-employment tax.

Further Steps of South Carolina LLCs

Open a Business Bank Account

It is important to keep a personal and business account. A business bank account assists in the simplification of the bookkeeping process, liability coverage, and simplification of tax filing. Articles of Organization and EIN Your Articles of Organization and EIN are usually required by banks.

Apply to Credit Card: Business

A business credit card assists in establishing business credit and can be utilized in start up costs thus offering a chance at financial flexibility without impacting on personal credit.

Get Business Insurance

Insurance protects your investment to the risks. These are general liability, professional liability (E&O), workers comp, property, equipment breakdown, commercial auto, and business owner policy (BOP) that is a combination, coverage.

Keep LLC Records

Maintain store formation records, operating agreements, contracts, licenses, and financial records in a safe manner. With the help of good recordkeeping, then you are assured of compliance and your LLC is safe in the event of any legal disputes.

South Carolina LLC FAQs