Get an LLC in SC Quickly & Easily

Quick facts about forming an SC LLC

Item	Details
State filing fee (Articles of Organization)	$110
Electronic Records Access fee (online filings)	$15
Processing Time	Usually processed within a few business days online; mailed filings take longer
Annual Report Fee	None for LLCs unless taxed as a corporation (LLCs taxed as corporations pay a license fee of at least $25 to the SCDOR)
Registered Agent Required	Yes (South Carolina law calls it an agent for service of process); must have a South Carolina street address
State Franchise Tax	None for LLCs
Business License	No statewide license, but most cities and counties require a local business license
Managing Authority	South Carolina Secretary of State, Division of Business Filings

If you’re in the process of starting a business in the states, you are probably considering which type of business entity is best for you and which state should you choose.

You might come to the conclusion that a limited liability company (LLC) is the better alternative for you as there are some significant advantages to it: most importantly, making an LLC provides the ability to help protect your personal assets from business creditors. Another major benefit of forming an LLC is that it makes it easier to manage regulatory and compliance matters.

If you choose to start an LLC, then South Carolina is definitely one of the states you should consider. South Carolina’s corporate income tax rate is 5%, LLCs pay no franchise tax, and LLCs don’t file an annual report. The state also offers income tax credits for qualifying businesses.

How to start an LLC in South Carolina in 5 easy steps

In order to start an LLC in South Carolina, you’ll need to gather information and follow the following steps:

1. Name your South Carolina LLC
2. Choose a registered agent
3. File articles of organization
4. Create an operating agreement
5. Apply for an EIN

Keep reading this post or watch our video for a detailed explanation of each step.

Step 1: Name your South Carolina LLC

The first thing is to choose a name you like for your business, which is also a crucial part of establishing and launching a new business. You will need to make sure that it follows the specific requirements in SC, and there are additional actions to consider if they’re relevant to the state your business is in, such as reserving the name to buy some time before filing your LLC, protecting it with a trademark, securing a domain, and more.

Follow the naming requirements in SC

The following are the main requirements when choosing your LLC name in South Carolina:

• You must ensure that the name you choose is unique, which you can check by conducting a South Carolina business entity search using the state’s database. It must be distinguishable from names already on file with the South Carolina Secretary of State.
• SC requires you to include one of the following in your business name: limited liability company, limited company, or an abbreviation (LLC, L.L.C., LC or L.C.).
• Some words, such as “bank,” may need approval from another agency.

Reserve a business name (if needed)

Reserving a business name in South Carolina is not mandatory or necessarily required. If you came up with a name in accordance with the state’s requirement, but you’re not quite ready to register your LLC name for any reason, you can reserve it for up to 120 days. You’ll need to fill out the relevant form (F0038, which you can find on the SC Secretary of State platform) and pay a $25 fee. Note that the 120-day reservation period is non-renewable.

File a DBA (if relevant)

If you want to use a different name when you conduct business (and not your LLC name), you’ll need a “doing business as,” also known as a DBA South Carolina. South Carolina doesn’t register DBAs at the state level. Check with your city or county; many let you list a DBA on your local business license.

If you want to protect your business’s DBA name so another person cannot use it, you can trademark the name.

Register your name for trademark

Another layer of protection to consider in that aspect is to register your business name as a trademark. In fact, if you use a DBA you should trademark your name so that another person cannot use it for his or her business, because you cannot register a DBA with the South Carolina Secretary of State.

To register a trademark in South Carolina, complete the Application for Registration of a Trademark or Service Mark. Forward it with the applicable fees to the South Carolina Secretary of State’s Office (see address below). The fees are non-refundable, so if you have questions, it’s best to contact an intellectual property attorney before applying.

Mailing address for trademark application:

• South Carolina Secretary of State
• Attn: Trademarks Division
• 1205 Pendleton Street, Suite 525
• Columbia, SC 29201

Note that if you choose to register a trademark in South Carolina, it still does not protect your business on a national level. For that, you would have to register it with the United States Patent and Trademark Office.

Step 2: Choose your registered agent (and why you need one)

Before you can file the documents for your LLC registration, you must choose a registered agent, as it is one of the requirements to register an LLC in SC. You can be your own registered agent or pick someone you know as long as you meet the state requirements (see below), or you can hire a registered agent service.

What are the LLC registered agent’s responsibilities?

• Serve as the business’ contact person: The registered agent’s name and address must be made available to the public through the Secretary of State’s office.
• Corporate liaison: The registered agent is the liaison between your business and the government. The agent accepts legal documents from the state and ensures the business owner receives them.
• Service of process: If someone wants to sue the company, it must serve the lawsuit to the registered agent of the business. A registered agent who is not the LLC owner or its member also means that you keep your administrative business separate from the company. For example, you might not want your employees to know that you were served with court documents.

Who can be a registered agent in South Carolina?

Any of the following can serve as a South Carolina registered agent:

• An individual South Carolina resident.
• A South Carolina corporation or another LLC.
• A foreign corporation or LLC authorized to do business in South Carolina.

Step 3: File articles of organization

The formation document for a South Carolina LLC is the Articles of Organization, and filing it registers the business with the state. Filing online costs $125; filing by mail costs $110:

• State filing fee (Articles of Organization): $110
• Electronic Records Access fee (online filings): $15

If you’ll need to amend the articles of organization, there’ll be an additional $110 fee.

Information required to fill the LLC articles of organization

The articles of organization SC must include the following details:

• The LLC business name, including “limited liability company,” “LLC” or another allowed ending.
• The designated office address in South Carolina.
• The registered agent’s name and South Carolina street address, plus the agent’s signature accepting the appointment.
• Each organizer’s name and address. Each organizer signs the articles.
• The duration of the LLC: Whether it’s a term company and, if so, the term.
• The LLC’s management: Whether the LLC is manager-managed and, if so, the names and addresses of the initial managers. Therefore, you’ll need to determine this before you file the articles.
• Whether any members are liable for the company’s debts.

SC filing options

The quickest and easiest way to file your new LLC articles of organization is online. If you wish to file using paper forms, send two copies of the completed articles, the $110 filing fee and a self-addressed stamped envelope to the following address:

Secretary of State

Corporate Filings

1205 Pendleton Street, Suite 525

Columbia, SC 29201

Step 4: Create an operating agreement

A recommendation for all limited liability companies is to create an operating agreement. This document dictates how the business is run, and serves as a contract between members, whether managing or not.

Even if it’s friends or family that create the business, you should have an operating agreement. That way, when one of the members questions the actions or inactions of another member, you can fall back on the operating agreement, which can also set out how a member leaves or how to dissolve the LLC.

Is an operating agreement mandatory?

South Carolina doesn’t require a written SC LLC operating agreement, and you don’t file one with the state. The LLC Act says an operating agreement doesn’t have to be in writing, so it can be oral or implied, but a written one is the safest choice. Every member and managing member (if the LLC has managers) should have a copy of the operating agreement.

Step 5: Apply for an EIN

Every business should have an employer identification number, known as EIN, and so does your LLC (even if it’s a single-member LLC). You can use the EIN instead of your social security number (SSN), as the EIN is a unique number for the business, which helps to protect your privacy and separate your business and personal finances. This way, if the business has a separate bank account and an EIN, it is harder for plaintiffs suing you to claim that you as an individual and the business are one and the same.

You can apply for your own EIN online, or hire a service like Tailor Brands to do it for you stress free. You’ll need an SSN or ITIN for the responsible party.

What to Do After Forming an LLC in SC

After your LLC is officially registered there are still some actions to take, either because it is legally required or just best practice. For instance, most South Carolina local business licenses renew each year by April 30, and you may have non-official annual fees such as the registered agent service fee (if you’re using one).

It is generally recommended to consult with and maybe retain a business law attorney. This is the easiest way to understand the requirements, stay in good standing with the state and maintain annual compliance in case any requirement changes, and stay on top of the different dues dates.

A couple of the things you’ll want to take care of immediately after you open your LLC in SC are understanding if and which licenses and permits you need and obtaining them, and opening a separate bank account for your business.

Obtain relevant business licenses and permits

South Carolina has no statewide general business license, but most cities and counties require a local South Carolina business license, which runs May 1 to April 30. SC Business One Stop (scbos.sc.gov) can help you find the state registrations you need.

Local license fees vary by city, county and type of business. Be sure to verify all licensing and permit requirements with the appropriate local government, including home businesses. If you have a business that requires you to store inventory, verify that you can store that type of inventory at the business. For example, if you have a home business and need to store fertilizer or chemicals, verify that you can store them on residential property.

Verify whether the state or your local jurisdiction requires you to have insurance for the type of business you own. In many cases, the county or state does not require insurance, but it would be prudent to have business insurance coverage, especially for businesses that could pose a danger to customers. For example, an auto repair shop should have garagekeepers insurance, which covers damage to customers’ vehicles in its care.

Finally, South Carolina requires workers’ compensation insurance if you regularly employ four or more people (with some exemptions).

Open a separate business bank account

Once you form an LLC, you have several additional steps to take, including opening a separate bank account. While this is not mandatory, opening a separate bank account serves several purposes, including:

• The business looks more professional
• Some creditors might require a separate account
• Your business accounting is more accurate
• You do not commingle funds, which means that it is more difficult for someone to sue you personally. If you commingle funds, a potential plaintiff could argue that you are just as liable for damages as the business

Deposit any income the business makes into the account. Pay all business expenses from the account, including paying yourself. Other items you should pay from the business account include taxes, filing fees, legal consulting fees, inventory, office supplies, registered agent payments, utility payments, mortgage or rent payments, payroll, and anything else you purchase for the business.

Looking for funding? See our guide to South Carolina small business grants.

Comply with South Carolina’s tax requirements

In general, businesses must pay taxes at the local, state, and federal levels, and some taxes depend on the locality of the business. Usually, if a tax is at the state level everyone pays it, and in addition to that counties and cities might have extra taxes for businesses within their jurisdiction.

Decide how your LLC will be taxed in SC

LLC taxation is complex. The Internal Revenue Service has rules based on how you set up the LLC. By default, LLCs don’t pay federal income tax themselves; profits pass through to the owners. Therefore, you’ll need to further understand the possibilities and determine which is best for your LLC structure and needs.

These are your alternatives:

Single-member or multi-member LLC taxation

The default taxation method for a single-member LLC is to pass the taxes through to the owner, who then pays the business taxes on his or her personal tax return, as the IRS considers a single-member LLC a disregarded entity. If the business owes taxes, the taxpayer pays based on his or her personal income tax rate. If the business shows a loss, the IRS deducts the loss from the taxpayer’s personal income. Most individuals will report the taxes on Schedule C.

If the LLC is a multi-member LLC, the taxes pass through to the individual taxpayers’ personal income tax returns. Each member pays taxes on the income according to the percentage of their ownership in the LLC. The tax rate is based on each individual’s tax rate. Thus, if the LLC has two owners and one has a 60% stake while the other has a 40% stake, the owner with the 60% stake pays 60% of the business taxes. The other owner pays 40%.

Multi-member LLCs file Form 1065, U.S. Return of Partnership Income, each year (due March 15 for calendar-year LLCs) and give each member a Schedule K-1.

Corporate structure taxation

The LLC members can choose to classify the LLC as a C-corporation or an S-corporation. If taxed as a C-corporation, you’ll file Form 8832 with the IRS. The LLC is then subject to the flat 21% federal corporate tax rate, and the LLC files Form 1120.

If you wish to file as an S-corporation instead, you’ll need to file Form 2553 with the IRS. The IRS taxes an S-corporation as if it were a pass-through entity, much like a sole proprietorship, but salary and distributions are taxed differently. If you go with the S-corporation status, you will file Form 1120S on your income tax return.

Regardless, always check with a tax attorney to determine whether electing C-corp or S-corp status will benefit you at tax time. While you might pay taxes twice on the same dollar, corporations are eligible for deductions and credits that individuals are not.

Different taxes your LLC might pay in SC

In addition to deciding on how your LLC will be taxed, it’s important to educate yourself on the different types of taxes your business may be liable for, as detailed below.

Income tax

Corporations, including LLCs that opt for the C-corp designation, must file a corporate tax return. An LLC taxed as a corporation also files Form CL-1 with the SCDOR and pays a $25 initial license fee within 60 days of starting business in South Carolina. Estimated tax payments are made using Form SC1120-CDP or online via MyDORWAY. If an LLC has employees, withholds taxes, or makes retail sales, it must also file SCDOR-111 Business Tax Application.

C-corp taxes are currently 5 percent on taxable income. Multistate businesses apportion their income to South Carolina under special rules, and some industries, such as telephone companies, railroads and airlines, use special apportionment methods.

Additionally, C-corporations pay a yearly license fee of 0.1 percent of capital and paid-in surplus plus $15 (minimum $25).

S-corporations must file SC1120S and are subject to a yearly license fee of 0.1 percent of capital and paid-in surplus. They also have a $15 fee. Income taxed at the S corporation level is taxed at 5%.

Starting with tax year 2021, a qualifying S corporation, including an LLC taxed as an S corporation, can elect to pay tax on its active trade or business income at the entity level.

Sales tax

Any business, including an LLC that sells goods and services, must collect and pay South Carolina’s 6% state sales tax, plus local sales taxes that most counties add. The local sales tax is in addition to the state sales tax. Retailers need a $50 Retail License from the SCDOR for each location.

Self-employment tax

All LLC members and managers who take profits out of the LLC must pay self-employment tax to the Internal Revenue Service. This tax covers Social Security, Medicare, and other benefits. The self-employment tax rate is 15.3%.

Payroll tax

If an LLC has employees, it must deduct payroll taxes. The withholding tax laws in South Carolina state that employers must withhold tax from wages, royalties, prizes, winnings, nonresident contractors with contracts exceeding $10,000, and certain rental and real estate transactions.

Other state taxes

Other taxes South Carolina charges to certain industries include:

• Alcohol and beverage licensing. The type of business determines the tax rate, e.g., retailer, wholesaler, or manufacturer/distributor
• Accommodations. Any business or individual who rents out accommodations to travelers must pay an additional 2 percent tax in addition to the state and local sales taxes
• Bingo
• Coin-operated devices. The state requires owners of coin-operated devices to renew a license every two years. The tax is the renewal fee, which varies based on the type of machines, e.g., Class 1, Class 2, or Class 3
• Motor fuel taxes. South Carolina has several motor fuel taxes on gasoline, blended fuels containing gasoline, gasohol, diesel fuels, alternative fuels, substitute fuels, and blended fuels containing diesel fuels. The state also charges an environmental impact fee of $0.0050 per gallon, except on LP gas, and an inspection fee of $0.0025 per gallon, except on LP gas
• Property. The state also taxes property owned by individuals and businesses. While the South Carolina Department of Revenue administers these taxes, they are based on local jurisdictions. Businesses that are subject to property taxes include but are not limited to airlines, carlines, manufacturing, motor carriers, and utilities. The state also charges a business personal property tax on furniture, fixtures, and equipment
• Miscellaneous. The state also charges some miscellaneous taxes, including: Admissions, beer, cigarettes and other tobacco products, deed recording fees, electric power, forest renewal fees, indigent care assessment (hospital), liquor, liquor by the drink, PSC Utility assessment, and wine.

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