A South Carolina LLC operating agreement can help you establish the ideal operating procedures and ownership percentages for your company’s needs. It can also help you sort out specific financial elements, including capital contributions and profit/loss distributions.
After company members meet to write this document and agree on its stipulations, they conduct the business by referring to it. If they have any changes they want to make while operating the LLC, they can make addendums.
Is an LLC Operating Agreement Required in South Carolina?
No, an LLC doesn’t have to instate an operating agreement in South Carolina. However, this document can help a company establish its operational and financial procedures from its inception.
Title 33, Chapter 44 of the South Carolina Code of Laws contains the Uniform Limited Liability Company Act of 1996, which lists the laws related to LLCs’ governance.
The primary statute that covers operating agreements is § 33-44-103, which discusses the effect of operating contracts and non-waivable provisions.
Costs and Fees
Here are some costs and fees to expect when you begin creating and maintaining an LLC:
- Filing fee (for a domestic or foreign LLC): $110
- Fee to change your registered agent: $10
- Fee to obtain a certificate of good standing: $10
- Company name reservation fee: $25
How to Form an LLC in South Carolina
Here’s a step-by-step overview of the process of forming an LLC in South Carolina:
Step 1 – Decide on a Name
Begin by choosing a name for your LLC. Remember that the name must be unique and contain some reference to being an LLC. You can check for available names in the South Carolina business name database.
Step 2 – Select a Registered Agent
Next, you should choose a registered agent who will accept documents on behalf of the business, including legal and tax paperwork. The South Carolina Secretary of State requires that the registered agent be one of the following.
- A South Carolina resident
- A business entity authorized to operate in South Carolina
To qualify, the registered agent must also maintain a physical address in South Carolina.
If you’d like, you can use a registered agent service to find a reputable individual for the job.
Step 3 – File the Articles of Organization
Once you know your business name and have found a willing registered agent, you can file your articles of organization through the Secretary of State. Your articles of organization should include the following information:
- Your LLC’s name and address
- Your registered agent’s name and address
- Every LLC organizer’s name and address
- Specification of whether the LLC is managed by managers or members
- The intended effective date of your LLC
Step 4 – Create an Operating Agreement
This step is optional, but this is the point at which you would draft the operating agreement if you choose to have one.
An operating agreement will contain the following information:
- Organization: Who are the members, and how is membership divided?
- Management: Who will manage the company, and how will the team decide on business matters?
- Capital contribution: How much money has each member invested in the company?
- Distribution: How will profit and loss be distributed to members?
- Membership changes: What is the procedure when members leave or get bought out?
Step 5 – Get an EIN Number
Once you’ve established your business with the state, you can request an Employer Identification Number (EIN) from the IRS. This number is necessary for completing critical financial matters, like filing a tax return and setting up a business bank account.
Step 6 – Fulfill Any Legal Obligations
Finally, you must fulfill any additional legal obligations relevant to your business. For example, you may need to apply for a business license, depending on the type of products or services you offer.
While South Carolina doesn’t mandate LLCs to fill out an annual report, you must meet other requirements. For instance, you must file yearly sales and use taxes, state employer withholdings, and state business taxes.