How to Start an LLC in South Carolina: All You Need to Know

South Carolina consistently ranks as one of the nation's most business-friendly states due to its tax incentives, infrastructure, and easy access to East Coast markets. If you're considering forming a South Carolina limited liability company (LLC), here's what you need to know.

 

South Carolina LLC state and federal tax requirements

State and federal income taxes

LLCs are treated as pass-through entities by default. When filing their state and federal tax returns, each member pays personal income taxes on their share of the LLC's income and profits. South Carolina's individual income tax rate ranges from 0% to 6.2% for the 2024 tax year.

 

Federal self-employment taxes

LLC members in South Carolina (and elsewhere) pay the 15.3% federal self-employment tax, consisting of 12.4% for Social Security and 2.9% for Medicare.

 

Corporate taxes

LLCs that elect C corporation status are subject to South Carolina's 5% corporate income tax.

 

Step-by-step guide to forming an LLC in South Carolina

Choose a name for your South Carolina LLC

The State of South Carolina has two guidelines for naming an LLC:

• The name must be distinguishable from the names of existing businesses on file with the South Carolina Secretary of State.
• The name must contain "limited liability company," "limited company," or the abbreviation LLC, L.L.C., LC., or L.C. It's OK to use "Ltd." or "Co." as a substitute for "limited" or "company," respectively.

You can confirm whether your chosen LLC name is available by using the South Carolina Secretary of State Business Name Search. If you need more time to file your articles of organization, you can reserve the name for up to 120 days by mailing an Application to Reserve a Limited Liability Company Name and submitting the $25 filing fee.  

 

Designate a South Carolina registered agent

LLCs in South Carolina must continuously maintain a registered agent and registered office to accept legal correspondence ("service of process") on the LLC's behalf. The registered agent can be a resident of South Carolina or an entity authorized to do business in the state. The individual's or entity's business office must be the same as the registered office.

 

File your South Carolina articles of organization

An LLC is created by filing articles of organization with the South Carolina Secretary of State. You'll provide details about your LLC and registered agent, including names and addresses. The filing fee is $110, and you can file online or by mail.

 

You've opened a business in South Carolina, now what?

Once you form your LLC in South Carolina, you'll need to check off five more action items—some optional, depending on your business. Review each one of these to see which applies to you.

 

1. Obtain an Employer Identification Number (EIN)

Unless you have a single-member LLC, you'll need an EIN for federal income tax purposes. You'll also need one to open a business bank account (such as Found) or apply for credit for your LLC. You can apply for an EIN for free on the IRS website.

 

2. Get a South Carolina business license 

South Carolina doesn't require a standard business license at the state level. Still, your LLC may need a tax, occupational, or local license, depending on what your business does. Visit the South Carolina Department of Consumer Affairs website for state business-licensing requirements. Contact a city or county clerk in your area for local licensing requirements.

 

3. Register with the S.C. Department of Revenue

If your LLC has multiple members or employees, sells goods, or collects sales tax, you'll need to register with the state's Department of Revenue to satisfy state tax requirements. Visit the South Carolina Business One Stop  website to learn more.

 

4. Draft an operating agreement

You don't need an operating agreement to form an LLC in South Carolina. Still, drafting an operating agreement is recommended because your LLC could face legal and operational complications without one. A comprehensive operating agreement should describe your LLC's business structure, how it will be run, and the members' responsibilities and obligations.

 

5. File a report with FinCEN

Starting Jan. 1, 2024, all LLCs must file a Beneficial Ownership Information (BOI) report with the U.S. Financial Crimes Enforcement Network (FinCEN). You have until Jan. 1, 2025, to file an initial BOI report if you started your LLC before Jan. 1, 2024. Otherwise, you have 90 days to file if you form the LLC in 2024—or 30 days if you start an LLC in 2025 or beyond.

 

Pros and cons of forming an LLC in South Carolina

Pros

• The filing fee to form an LLC in South Carolina is $110, which is lower than in most states.
• Most South Carolina LLCs don't have to file an annual report.
• LLC members are shielded from liability for business debts and lawsuits. 

Cons

• LLC members are subject to the 15.3% federal self-employment tax.
• South Carolina doesn't offer expedited LLC filings.
• There is no option for setting up a series LLC in South Carolina (though you can operate multiple businesses under one LLC by using a different “doing business as” (DBA) for each). 

Resources for South Carolina LLCs

Whether you're an established LLC or just getting started, numerous national and South Carolina resources can help your small business succeed:

• Small Business Administration (SBA)
• Service Corps of Retired Executives (SCORE)
• South Carolina Small Business Chamber of Commerce
• South Carolina Business Development Centers 
• South Carolina State Library's Small Business Reference Center
• Charleston Digital Corridor
• Municode

 

TIME Stamp: South Carolina is business friendly 

South Carolina is a business-friendly state with straightforward requirements for forming an LLC. If the process seems daunting, consider using an online business-formation service to establish your LLC. For example, LegalZoom has three plans ($0, $249, and $299) with various levels of tools and guidance to help you launch your new business.

 

Frequently asked questions (FAQs)

What is needed to start an LLC in SC?

Forming an LLC in SC is straightforward. You'll need to choose a unique business name, designate a registered agent, and file your articles or organization with the state.

 

How long does it take to get an LLC in South Carolina?

If you file your articles of organization online, your LLC will generally be approved within one or two business days. Filing by mail takes up to three or four weeks, including processing and the time your documents are in the mail. South Carolina doesn't offer expedited LLC service.

 

Do LLCs pay taxes in South Carolina?

South Carolina LLC members pay state and federal income taxes on their share of the company's income, plus the 15.3% federal self-employment tax. LLCs that elect C corporation status are subject to the 5% corporate income tax.