South Carolina LLC (6 Steps) How to Form an LLC in SC?

If you are looking to start a business or upgrade an existing one, a limited liability company (LLC) is a great choice. An LLC is a popular business structure that can protect your personal assets.

This is because an LLC combines many of the best aspects of a corporation and a sole proprietorship into one. So, if you would like to see how to form your South Carolina LLC, read on.

Step 1: Choose a Name for Your South CarolinaBusiness

Choose-Your-Business-Name

The first step in forming your South Carolina LLC is choosing a name for your business. This is an important step, and your name should comply with South Carolinas requirements, be easily found by potential clients, and be satisfactory to you.

South Carolinas requirements include:

  • Required Words: Your chosen name is required to include the words “limited liability company” or an abbreviation including “L.L.C.” or “LLC.”
  • Restricted Words: Your chosen name may not include certain words such as bank, attorney, or dentist without further paperwork and potentially having an individual with proper licensure as a member of the LLC.
  • Distinguishable: The name you choose must be distinguishable from all other LLCs, limited partnerships, corporations, and registered fictitious names in South Carolina.

To check if a name is available and isn’t already taken, you can perform a business entity search on the South Carolina Secretary of State’s website. Another thing to consider is whether or not a suitable URL for the name you choose is available. If it is, then you may want to consider purchasing the URL to prevent others from using it even if you do not intend to file your Articles of Organization immediately.

Name Reservation

If you have chosen the perfect name with an available URL, it’s possible you may want to make sure it is there when you are ready to file. To do this, you can file an “Application to Reserve a Limited Liability Company Name.” This application will be filed with the Secretary of State and will require a $25 filing fee.


Step 2: Select a South Carolina Registered Agent

Registered-Agent-Service

The next step is to select a registered agent based in South Carolina. A registered agent is an individual or business that will receive correspondence from the government such as tax forms, service of process, legal documentation, and other government correspondence.

This means that the registered agent you select will serve as your business’s point of contact with the state. A member of your company may serve this role or any other resident or corporation authorized to perform business in South Carolina.

Factors to Consider When Choosing a Registered Agent

There are some factors you should consider when choosing your company’s registered agent, whether it is yourself, a member of your company, or a paid service. These include:

  • Public Record

When your company designates a registered agent as their representative, the name and address of this business or person will be placed on public record attached to your company. This is public so that a process server can locate a representative of your business. This will allow them to serve your business notice of a lawsuit.

This means that this information is publicly available for anyone to see. This is a particular problem if your business address is your private home address. This can be a loss of privacy and lead to junk mail and unwanted sales visits. The problem can be reduced by giving a business address, but by hiring a service to act as your registered agent, this problem can be avoided completely.

  • Loss of Reputation

If the loss of privacy from having your name and address made public isn’t an issue, there is another risk to consider from acting as your own registered agent. It isn’t pleasant to think about, but it is possible your business will eventually suffer from a lawsuit.

If this occurs, your registered agent will receive the service of process. If this is your business, you may be served in front of your customers and patrons. This could greatly harm your reputation. If it is at your home address, this could be even more embarrassing in front of family and friends.

By using a registered agent service, you can retain not only your personal privacy but also keep legal matters private as well.

  • Available Hours

South Carolina requires your registered agent to be available during all regular business hours at the provided address. This can be a considerable limitation on certain types of businesses with different operating hours, such as bars or restaurants, as well as businesses that do not operate in one location, such as consulting firms.

This can also make it hard for small business owners accustomed to performing errands during work hours or who wish to take a vacation that will leave them unavailable. Even if this is not a hardship, it can be inconvenient to stop work, accept documents, and properly secure them.

But with a registered agent service, they will always be there during business hours to accept and store documents for when you are ready to read them.

  • Multi-State and Expanding Businesses

For businesses that operate out of multiple states, they are required to have a registered agent based within each state. In this case, it is impossible to act as your own registered agent personally. This will make it necessary to hire another entity to serve as your registered agent.

  • Convenience

For business owners looking to form an LLC, you likely already have enough on your plate. Often this already involves performing several roles in your company. As a registered agent, you must be available during all regular business hours, and you must consider whether you have the time.

You also must keep up to date with any new legislation or rules affecting the way the service of process is accepted. By hiring a service, you can focus on more important things like your business.


Step 3: File Your Articles of Organization For SC LLC

Articles-of-Organization

Filing the Articles of Organization with the Secretary of State is what forms your LLC. There are several things that need to be included in this agreement, including:

  • Name of the LLC: The name of your LLC needs to be distinguishable from other LLCs. The name also cannot cause people to believe your business is a government agency. Your members may need to be licensed or have to fill out extra documentation to use certain words, such as an attorney, bank, or other restricted names. Additionally, all LLCs must include the words Limited Liability Company, Limited Company, or an abbreviation of these terms. You may abbreviate the term, limited, as “Ltd” or, company, as “Co.”
  • Name and Address of Your Registered Agent: You’ll need to include the name and address of your registered agent. This can be an individual or a registered agent service, but the registered agent must have a physical address in the state in which your LLC is being formed. Also, a registered agent must be available during business hours to receive notice of a lawsuit and other legal documents.
  • Organizer: The names and addresses of each member must be listed. This is the person or persons responsible for filing the Articles of Organization. This is usually one or more of the members, but it doesn’t have to be. The organizers need to sign the form as well.

Management Type: You will list whether your LLC will be member-managed or manager-managed. In a member-managed LLC, the members run the LLC and make all the decisions about how it will be run. Whereas, in a manager-managed LLC, the members choose a manager to run the LLC. The manager can be someone outside of the LLC or a member.

In either case, the manager makes all of the decisions for the LLC. The members can advise the manager on decisions, but the manager doesn’t need to take the advice. However, the members can reserve the right to make certain decisions if they specify these decisions in the operating agreement.

  • End Date: If your LLC has an end date, include the date. If it does not have an end date, it will be perpetual.
  • Effective Date: If you want your effective date to be after the date your paperwork is processed by the Secretary of State, then list the date you want. Otherwise, the effective date is the date your formation paperwork is processed.
  • Member Liability: You need to list if any of your LLC’s members will be responsible for its debt.

You can file your Articles of Organization online at the Secretary of State’s website or by mail. The address to mail the articles to is:

South Carolina Secretary of State’s Office
Attn: Corporate Filings
1205 Pendleton Street, Suite 525
Columbia, SC. 29201.

You need to send two copies of the Articles of Organization along with a check made out to the South Carolina Secretary of State for $110 and a self-addressed stamped envelope.


Step 4: Draft an Operating Agreement For Your South Carolina LLC

Operating-Agreement

You are not required to have an operating agreement to form an LLC in South Carolina, but it is a good idea. An operating agreement is a legal document that details the structure of your LLC along with the rights and responsibilities of the members.

This can help avoid arguments among the members of the LLC while running the business. An operating agreement also gives the members of an LLC more control over the business by stating the rules it will operate by instead of simply following state default rules.

There are several things that should be included in an operating agreement, such as:

  • General Information: You’ll put the name and primary address of your business along with any DBA (Doing Business As) names your business is using.
  • Names and Addresses: You should list the names and addresses of all of the members of your LLC.
  • Ownership Percentage: The percentage of the LLC that each member owns should also be listed. This is generally based on the amount each member invested, but this is not always the case. The experience a member has, or the work the member is expected to do, can also be taken into consideration.
  • Management: You’ll want to include how your LLC will be managed. Your LLC can be member-managed or manager-managed. Most LLCs are member-managed.
  • Profit Distribution: All of an LLC’s profits need to be allocated to its members each year for tax purposes. Although, the profits do not have to be distributed. The profits in an LLC are generally allocated based on ownership percentage, but the LLC can choose a different method. In this case, the method of allocation needs to be specified in the operating agreement, or state default rules will apply. If you choose to allocate profits by a method other than ownership percentage, it’s best to specify why in the operating agreement. Otherwise, the IRS may suspect tax evasion.
  • Member Responsibilities: Members can have very different responsibilities. Some members may be in the LLC simply as an investment and not want to be involved in the running of the LLC. Other members may be expected to have specific roles in the LLC. It’s best to specify these details in the operating agreement.
  • Tax Status: You should state what tax status you intend to use for your LLC. An LLC is a pass-through entity; the profits will go to the members through distributions and be taxed on their tax individual tax returns. So, by default, a one-member LLC will be taxed as a sole proprietorship, and a multi-member LLC will be taxed as a partnership. Or, if you choose, your LLC can be taxed as an S – Corp or a C – Corp if you file the proper forms with the IRS.
  • Voting: In a multi-member LLC, there will probably be times when not everyone will agree on a decision. So, you will likely need to vote. Therefore, it’s a good idea to have voting rules in place. It’s best to specify which votes require a majority and which require a supermajority. It might be best to require a supermajority for more serious decisions, such as bankruptcy or dissolution.
  • Member Admission or Withdrawal: There may come a time when you want to admit a new member or a member wants to withdraw. Therefore, you should have a procedure in place for if this happens.

You will probably need a vote to admit a new member, and you should specify the percentage of members required to approve the admission. You should also include the procedure for member withdrawal.

This may be a little more complicated than admitting a new member. You’ll need to include any restrictions on what a member can do with their shares of the LLC, such as whether the member buying or being given the shares needs to have any particular qualifications and whether or not the current members have the right to purchase the shares before they can be given away or sold to anyone else.

  • Dissolution: Eventually, the members may want to end the LLC. Doing this will probably require a vote. If the members do decide to end the LLC; then, documents need to be filed, the assets will need to be liquidated, any debts paid off, and any remaining assets distributed. Therefore, you should specify how all of this will be handled.

Step 5: Obtain an EIN

EIN-Employee-Identification-Number

An EIN is an Employer Identification Number, also sometimes called a Tax Identification Number. It’s a nine-digit number that the IRS uses to identify businesses for tax purposes.

You’ll need to obtain one of these numbers for your LLC in order to file your state and federal taxes, hire employees, or open a business bank account. Fortunately, it is easy to obtain an EIN, and it’s free. You can apply for one online on the IRS website, or through the mail, by fax, or for international applicants by phone. If you apply by mail, fax, or phone, you will need to fill out Form SS-4.

Then if applying by mail, send it to:

Internal Revenue Service
Attn:  EIN Operation
Cincinnati, OH 45999

The process will take approximately 4 weeks.

If you choose to apply by fax, fax the form to Fax: (855) 641-6935. This process will take about 4 business days.

If you are an international applicant, you can apply by phone at 267-941-1099 between 6 a.m. and 11 p.m. Eastern Time. However, keep in mind, this is not a toll-free number.


Step 6. Start a South Carolina Business Checking Account

Business-Bank-Account

As a sole proprietor or general partnership, it is sometimes unnecessary to start a business bank account. But, as an LLC, it can be quite important, and these are some reasons why:

  • Keep Your Limited Liability: As a limited liability company, your members’ personal assets are protected in the event your LLC is sued. But, this protection only applies if your personal finances are kept totally separate from your business’s finances. If your business fails to do this, the court could remove your limited liability, and your members’ personal assets would no longer be protected. This is called piercing the corporate veil. One important step your business can take to keep its finances separate is to open a business bank account.
  • Professional Image: A business bank account can make your business appear more legitimate. If clients need to write checks to you personally, they may become concerned about how legitimate your business is. It could also cause you to look like an amateur, which might also cause your clients to be concerned about who they are dealing with. Writing checks for goods or services from your personal checking account may cause similar concerns for your suppliers.
  • Easier Bookkeeping: Keeping your personal and business finances separate makes bookkeeping a lot easier. You don’t have to sort through all of your transactions and try to figure out which are business and which are personal. This is much easier if you have a business checking account. All of your business transactions will be in one place, and you won’t have to worry about accidentally marking a business transaction as personal or vice versa.
  • Accept Credit Cards: Many of your customers are probably going to want to pay by credit or debit card, and if you want to accept these forms of payment, you will need a business checking account.
  • Prevent Tax Problems: An LLC is a legal entity, and you are required to keep its finances separate from any of its members’ finances. If you don’t, you may have trouble at tax time; you may even be audited. But, you could avoid this trouble by keeping your LLC’s finances separate in a business checking account.

Get Professional Help When Creating Your LLC in South Carolina

If you’re kinda’ overwhelmed by the information given here and/or really have no time or experience in doing everything yourself — do not worry. You’re not alone. In fact 95% of people choose various LLC formation services to get the job done for them. In order to form your LLC in South Carolina — we really recommend Zenbusiness. They have pretty amazing customer support and overall they do an impressive job with helping people get their LLCs.

Use our special promo and get your LLC started today with ZenBusiness! Hassle-free, cheap, and quick.
They are one of the top-rated quality-to-price ratio services.

Final Thoughts

By forming an LLC, you can combine the best aspects of a sole proprietorship and a corporation and help protect your personal assets in case of business failure. By doing this, your business can retain a flexible structure and avoid the double taxation that corporations face. So, consider if taking the leap and forming a South Carolina LLC is right for you.

Learn How to Form an LLC in Other U.S. States:

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky

Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota

Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

Get Some More Knowledge About Business & LLCs

About the Author
Author Photo
Founder & author

Ian Broderick is an avid author and owner of LLCGuys.com. He's been involved with the LLC formation field for over 4 years. On top of that, he has worked in several well-known LLC formation service providers. Now he decided to share his knowledge and advice with everybody. Since there are a lot of questions and concerns surrounding this field - his aim is to make LLCGuys a top-notch information provider in regards to LLC creation, service reviews and etc..

Scroll to Top