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When starting a new business in South Carolina, selecting the right business entity is very crucial for the business to succeed. If your business has more than one owner, opening it as an LLC is usually the best option.
An LLC entity is an ideal business structure that allows entrepreneurs and Business owners legal protection by separating their assets from business debts. Also, LLCs in Carolina usually get a lower tax rate in the state than other corporations. However, starting an LLC can pose some problems depending on several factors.
This guide will beam its searchlight on how to start LLC in South Carolina, the pros and cons of starting one, the steps involved, and other information that will prove useful to business owners in the city who wish to open one.
Best Business Registration Services in South Carolina
Software
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Business Formation
Annual Reports
Customer Support
Registered Agent Service
From $49 plus state fees
Can file for an LLC or Corporation
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From $99 per year
$0 plus state fees
Can file for an LLC or Corporation
Annual report planning to help file correctly
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From $59 plus state fees
Can file for an LLC, Corporation, or a DBA
Report filing services available
Unlimited phone/email support during business hours
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From $0 plus state fees
Form an LLC, Corporation, or nonprofit
Facilitate annual report filing
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Form an LLC, Corporation, or nonprofit
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Knowledgeable and easy to access customer service team
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From $79 plus state fees
Can file for an LLC, Corporation, Nonprofit, or a DBA
Create an annual report from a few simple questions
Customer support team can’t always keep up with demand
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$39.99 per month or $99.99 flat rate
Form an LLC, Corporation, or nonprofit
Generate and maintain corporate records
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$112.50 to $149.99
Pros and Cons on starting LLC in South Carolina
Setting up a business structure in South Carolina comes with its challenges, that’s why business owners need to be decisive when making decisions. Opening an LLC in the city allows businesses to enjoy some benefits which make their business more lucrative.
Also, these benefits of llc make the business grow, attractive, and enjoy more patronage. Despite the many advantages that starting an LLC in South Carolina brings, there are some cons that business owners should be aware of.
Pros
Here are some advantages of starting an LLC in South Carolina :
Limited Liability
The greatest risk involved when opening a business in South Carolina is lawsuits from creditors and investors who want to claim losses. When you open an LLC in South Carolina, you are stating which of your assets are part of your business, and which are not. An LLC enables you to protect your vehicles, home, and bank accounts from being used to recover debts. An LLC helps you separate your business from your entity when your company is sued.
Flexibility
With an LLC in South Carolina, the flexibility of membership is allowed. Partnerships, corporations, and other LLCs can have a stake of a single LLC. While many large S-corporations can enjoy passing through taxation like LLCs, there is a limit.
Ability to raise funds easily
Capital is very important for any business to thrive because it allows business owners to grow and expand their businesses. As an entrepreneur in South Carolina, it’s pretty difficult to raise money on your of through friends. However, when you start an LLC, you show your business as a credible entity that will attract investors who are willing to put on the right capital to grow your business.
Tax Benefits
One of the biggest advantages of starting an LLC in South Carolina is the chance to elect taxation. When you use the best business bank accounts llc in South Carolina, you will be able to monitor your tax easily. This is unlike corporations that experience double taxation where the business is taxed differently from the people who get dividends.
Affordable Filing fees
When compared to other states in the country, opening an LLC in South Carolina doesn’t cost much. There are states in the USA with LLC filing fees of as much as $850, however, it is low as far as South Carolina is concerned. Asides from filing fees, the annual report fees are also affordable and can be paid easily.
Cons
While opening an LLC in South Carolina comes with many benefits, there are some disadvantages :
Compulsory Registered Agent
Since it is mandatory to have a registered agent to start an LLC in the state, you will have to pay a yearly service fee. If you don’t want the services of a registered agent, you can do it yourself, however, it comes at a cost. You will spend more time filing documents which will take a toll on you. With the right registered agent in South Carolina, your documents will be filed properly and approved quickly m
Carry Over limitations
Large corporations with big expenses don’t have to pay all earnings as dividends to shareholders. These S corporations can hold onto some of their money and carry them over to the next year. However, LLCs in South Carolina that enjoy pass- through taxation benefits don’t have such opportunities.
No Privacy
While some states such as Wyoming allow people starting an LLC to be anonymous, this doesn’t apply in South Carolina. However, South Carolina doesn’t give this opportunity for security reasons.
7 Steps on How to Start LLC in South Carolina
Here are the steps to take when you want to open an LLC in South Carolina :
1. Check for Your preferred Name
The first step to take when you start an LLC in South Carolina is to search for your preferred name that is still available for use. When you have chosen a name for your brand, submit it quickly to reserve the name. This also applies to foreign entities who want an LLC in the state.
While reserving a name allows you to use it for your business in the state, it doesn’t grant you exclusive right. If you want the exclusive right to your company name, you will have to file a different document to register for a service mark or state trademark. To help you in your name search, ensure you check all social media platforms to check if a brand already has the name.
2. Get a Registered Agent
It is important that you just have an office address and a registered agent’s name when starting an LLC in South Carolina. A registered Agent will help deal with all legal documents on behalf of your company and send them to the proper channel. Residents agents are professionals who are knowledgeable about filing LLC documents in the state. In South Carolina, Agents should be Above 18, a resident of South Carolina, or a reputable firm authorized to do business in the state.
While you or any employee in the LLC can act as an agent, it is advised that you hire a registered agent. When you hire a registered agent in South Carolina, you will be expected to pay around $50 to $300.
3. Get Business License and permits
In South Carolina, it isn’t mandatory to have a general business license to operate an LLC within their borders, however, LLCs operating in certain industries must have occupational licenses or certifications. Moreover, some areas and municipalities in South Carolina might ask you to apply for a local business license before you can do business in their community.
4. Setting up your South Carolina LLC
Once the above steps have been completed, you should move forward to start opening an LLC. The next step is sending your Articles of Organization to the South Carolina Secretary of State for proper filing. This can be done in many ways :
- Online: The South Carolina Secretary of State website encourages entrepreneurs and Business owners to complete all their forms online. This is a faster and more efficient method of filing LLC documents. Also, you get to pay securely without issues.
- Physically:You can physically send the documents to the secretary of state office via Corporate Filings, 1205 Pendleton street, suite 524, Columbia, SC, 29201. If you want to use this method, ensure you hand over two copies of your completed documents. For payments, pay via check or money order payable to the South Carolina Secretary of state.
Don’t forget to include a self-addressed and stamped envelope. For foreign entities, they need to submit an Application for a Certificate of Authority to Transact business. For both domestic and foreign businesses, the charges remain at $110.
5. Apply for an Employer Identification Number (EIN)
Most businesses in South Carolina are mandated to get an EIN. This number, sometimes called a Federal Tax Identification Number (FTIN) or Federal Employer Identification Number (EIN) , is necessary if you want to open an LLC. Also, this EIN is important for people who want to know how to open a business bank account for an llc in the state. With an EIN, you can open checking and savings accounts easily for your business.
While a single-member LLC in South Carolina might use a Social Security Number instead of an EIN, it’s better and more secure to use your EIN during applications. You can apply for an EIN online at the IRS website and it’s free.
6. Check for Changes in Annual Requirements
While South Carolina doesn’t make it compulsory for LLCs in the state to submit annual reports, you should always check for updates in the laws regularly. This is because sometimes South Carolina updates requirements about LLCs and how they can operate in the state.
7. Create an LLC Operating Agreement
Operating agreements help you lay the right foundation and state how you run your LLC. Operating agreements help list crucial parts of an establishment such as individual contributions, how day-to-day business operations will be, and the voting rights of all members. You can check this llc operating agreement template to know the information needed for this document. When not compulsory for opening an LLC in the state, it is ideal for setting ground rules in the business.
While not many business owners know what is an llc operating agreement and Benefits of having one, it helps avoid unforeseen disputes with the co-owner which could lead to legal disputes. An LLC operating agreement also helps provide legal standing for your business. You can visit the South Carolina Secretary of state website for more information resources about the LLC registration process and obligations.
FAQs On Starting LLC (Frequently Ask Questions)
Conclusion
South Carolina is one of the best places where you can run your business easily. Business operations in the state are easy and don’t require much documentation. If you want to enjoy certain benefits, you should know how to start LLC in South Carolina. An LLC in SC comes with many advantages which business owners can enjoy.
We have also stated some cons which come with opening an LLC in the state. The steps mentioned above will guide you in registering for an LLC easily in the state, however with the help of a reliable registered agent service, it can be quicker and less stressful..
