With so many tools available, it’s easier than ever to start a business in South Carolina. But first, you’ll have to decide on what kind of legal structure you want for your business and file the necessary paperwork.
Many small businesses choose to establish a limited liability company (LLC) because they offer flexibility and protection for personal assets. But it’s important to understand the process of setting up an LLC, so you can decide whether this type of structure makes sense for your business. Here is a look at how to start an LLC in South Carolina.
Is an LLC Operating Agreement Required in South Carolina
No, an operating agreement is not required in South Carolina, but it is often recommended. A South Carolina operating agreement is a legal document that establishes the ownership structure and procedures of the business. There are two types of LLCs recognized by the Secretary of State of South Carolina, a single-member LLC and a multi-member LLC. Operating agreements are more useful for multi-member LLCs than single-member, but they can benefit any company,
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 business matters be decided?
- 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
While an operating agreement is not required by law, it can be helpful to establish the ground rules of the business from the very beginning.
South Carolina Operating Agreement Laws
The laws that govern how to create an LLC in South Carolina can be found in Section 33-44-101 of the South Carolina Code of Laws. Let’s take a closer look at some of the laws that are unique to South Carolina.
Name of the Company
South Carolina law dictates that the name of the company must contain one of the following phrases or abbreviations:
- Limited Company
- Limited Liability Company
- LC
- LLC
- L.C.
- L.L.C.
The word limited may also be abbreviated as Ltd. and Company may be abbreviated as Co. But it must be clear from the name that the business is structured as an LLC.
Registered Agent
Every new LLC is required to have a registered agent. This is a person who agrees to 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
The registered agent must also maintain a physical address in the state of South Carolina to qualify. Keep reading to find out how to register an LLC in South Carolina once you have a name and registered agent.
Annual Report
Members or managers of a business are required to file an annual report with the Secretary of State of South Carolina. This lets the local government know whether or not you are still in business and keeps the entity active with the state. Failure to record an annual report can result in fines and the potential dissolution of the business entity.
How Much Does it Cost to Form an LLC?
The Secretary of State of South Carolina charges $110 to file articles of organization, the documents needed to set up a limited liability company. This cost is the same whether you’re setting up a single-member or multi-member LLC and it can be paid by check or credit card. If you’re not quite ready to file the paperwork yet but want to reserve a name, you can do so by paying an additional $25 fee.
How to Form an LLC in South Carolina?
If you’re still unsure of exactly how to apply for an LLC in South Carolina, here is a step-by-step look at how you can complete the process.
Step 1 – Decide on a Name
The first step in how to get an LLC in South Carolina is to choose a name. Remember that it has to be unique and contain some reference to it 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. Keep in mind that it must be an individual or business entity with a physical address in the state of South Carolina.
Step 3 – File the Articles of Organization
After that, you’ll need to file the articles of organization with the Secretary of State and pay the $110 filing fee.
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.
Step 5 – Get an EIN Number
Once your business is established with the state, you can request an EIN number from the IRS. This is needed to complete important financial matters like filing a tax return and setting up a business bank account.
Step 6 – Fulfill Any Legal Obligations
Finally, you’ll need to fulfill any additional legal obligations required of your business. That includes applying for any business licenses and making sure to file the annual report each year.
South Carolina LLC Operating Agreement Template
So, if you’re ready to establish a new business, here is a helpful South Carolina operating agreement template you can use to organize your company.
