How to Form a South Carolina LLC in 10 Steps
One of the most common business structures is the Limited Liability Company. These are also known as LLCs.
With an LLC, any profits earned will be passed through to each member, who can own a select portion of the company (or one person can own the entire company). It's important to note that separate tax returns do not need to be filed with LLCs, and exposure to liability from company activities is drastically reduced with LLCs, unlike other business structure types.
It's fairly easy and straightforward to create your own LLC in the state of South Carolina. Here are the steps you'll need to take.
1. Choose Your Company Name.
You need a company name that no other business has the rights to use. SunDoc can run your name search or reserve your LLC name for a reasonable fee. At a minimum, your preferred name must be available in the State of South Carolina.
2. Understand the LLC Organizer Requirement.
An organizer must be named on your Articles of Organization. Your LLC organizer can be a manager of your LLC, a member of your LLC, or basically anyone else. You will be the default organizer if you prepare and file your Articles of Organization on your own. On the other hand, you can also have an attorney prepare and file your articles, and in this case, they would be your default organizer. Lastly, if you choose to prepare and upload your filing with SunDoc, you can name your own organizer.
3. Designate a Registered Agent.
A registered agent will need to be named on your Articles of Organization form. When choosing a registered agent, you may select either a firm or an individual. We offer additional information on what makes registered agents so important for your LLC in our article Registered Agent Service.
4. Decide Your Ownership and Management Structure.
You will be asked how your LLC is going to be managed on your Articles of Organization form. It’s up to you to decide whether you’d like to be member-managed, manager-managed, or managed by just one manager.
5. Create an Operating Agreement.
Unless you have a manager-managed LLC, you do not need to create your own Operating Agreement. For most LLCs, there will be an implied Operating Agreement that is based on specific laws in the state of South Carolina. If you do have a manager-managed LLC, you will need to create an Operating Agreement because South Carolina law states that these types of LLCs are only valid if you declare them in both your Operating Agreement and your Articles of Organization.
If you decide not to have a manager-managed LLC, you should still make sure that the default conditions of the implied Operating Agreement in South Carolina meet your business’ needs.
The Operating Agreement is the legal engine that drives your business, creating its governance, managing its working capital, and paying out its profits. Critical matters of money, voting, liability, and fiduciary constraints are at stake here. You may also wish to consult an attorney for advice.
6. File the Articles of Organization.
The State of South Carolina requires that you file a form called the Articles of Organization, which is simply a one-page form. Within it will be all of your company details. You company will officially be created as soon as your Articles of Organization are accepted by the South Carolina Secretary of State.
There are several pieces of information that you will need when filing your Articles of Organization. To begin with, you’ll have to have a unique name (that no one else has) for your new company. Next, you’ll need to know your company address.
Lastly, you will have to know three things: Your chosen management method, who your registered agent is, and who your LLC organizer is. In the State of South Carolina, you don’t have to file member names or publish creation of your new LLC in a newspaper of record.
If time is an issue for you or it’d be better for your schedule to outsource some paperwork, SunDoc would be happy to file your Articles of Organization on your behalf.
7. Obtain an EIN and Open a Business Bank Account.
Congratulations! At this point, you are officially a registered South Carolina LLC. If you have more than one member, it is not time for you to get an EIN. This stands for Employer Identification Number, and even if you don’t employ anyone, you need to file with the IRS to get one. Of course, SunDoc can file for you to save you time, or you are free to file with the IRS yourself.
Remember that you will need your Employer Identification Number for opening business accounts and for other business and money-related matters. At this time, consult with an accountant to help you with your business fiscal matters, and open a business bank account if you haven't already. For any purchases you made previously with your personal bank account, find the receipts, and reimburse yourself.
8. Pay South Carolina State Taxes.
Each year your LLC must pay a minimum annual tax to South Carolina's Franchise Tax Board, including in your first year of operation. This is not an income tax, but rather a cost to do business in South Carolina. Also, if you sell goods in South Carolina, you are required to collect sales tax. You can find more state tax information on the State of South Carolina’s tax web site.
9. Determine Necessary Licenses and Permits.
Most South Carolina companies are required to have one or more business licenses or permits to operate at the city or county level. You may be surprised to discover what’s required. Operating without the proper license or permit can result in expensive fines.
10. File An Annual Report.
Annual Report. Unlike most other states, South Carolina does not require LLCs to file an annual report.
Important Notice: It is beyond the scope of this article to discuss your potential insurance needs, or matters relating to employees. You should consult an attorney or accountant with any questions about legal or financial matters. Please note that nothing in this article can be construed as legal, tax or accounting advice.
For additional learning, please visit South Carolina LLC FAQs.
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