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Last Updated on November 29, 2023 by Dr. Gabriel O’Neill, Esq.
Embarking on the journey to establish your own Limited Liability Company (LLC) in South Carolina unveils a path to newfound opportunities and autonomy. Yet, the prospect of costs can cast a shadow over this exciting venture. While the process entails more than just the submission of initial documents, it’s essential to recognize that the expense of forming an LLC doesn’t have to be as daunting as it might appear at first glance.
By delving into the intricacies of the cost structure and tapping into invaluable LLC services like ZenBusiness, we’re poised to guide you through the process, shedding light on prudent strategies that can lead to significant cost savings along the way.
In this article, we’ll navigate the landscape of forming an LLC in South Carolina, unraveling its expenses, and charting a course toward financial efficiency and entrepreneurial success.
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What Is the Cost of Forming an LLC in South Carolina?
The primary cost to form an LLC in South Carolina involves a $125 fee for electronically submitting your LLC’s Articles of Organization to the Office of the Secretary of State for South Carolina.
Here’s the LLC Cost Guide for all US States:
South Carolina Foreign LLC Formation Costs
In case you possess an existing LLC that’s registered in a different state and you aim to broaden your business operations into South Carolina, the step required is to enroll your LLC as a foreign entity within the state.
The fee for the enrollment of a foreign LLC in South Carolina amounts to $110. The process involves submitting an Application for a Certificate of Authority to Transact Business to successfully register a foreign LLC in the state of South Carolina.
Annual Cost for LLCs in South Carolina
When setting up and managing an LLC in South Carolina, it’s crucial to factor in the continuous expenses. Fortunately, there are no annual report obligations for LLCs in the state.
Nevertheless, it’s mandatory for South Carolina LLCs to designate a registered agent for receiving legal notifications, and if you decide to opt for a professional registered agent service, you can anticipate an annual cost ranging from $100 to $300.
How Much Does It Cost to Start an LLC in South Carolina With the Best LLC Service?
ZenBusiness LLC Formation Cost
In South Carolina, the basic fee for LLC registration totals $125, with potential increments based on supplementary choices. The standard processing duration is 2 to 3 weeks. There’s an opportunity to choose expedited processing lasting 4 to 6 days for a supplementary fee of $50 or to opt for an accelerated process of 1 to 2 days for a fee of $100.
ZenBusiness presents three pricing options for their LLC formation services: Starter, Pro, and Premium.
- Starter plan: Opting for this is a suitable choice if you have fundamental business formation requirements, and it comes at a cost of $0 alongside state fees.
- Pro plan: The encompasses additional perks like expedited filing and registered agent service, with a price of $199 plus state fees.
- Premium plan: As for the, it stands as the most extensive package, incorporating all Pro plan features along with unlimited Worry-Free Compliance, a service aiding businesses in adhering to both state and federal regulations. The Premium plan can be acquired for $349 plus state fees.
With the purchase of any plan, ZenBusiness also includes a complimentary year of Worry-Free Compliance.
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Additional Costs When Starting an LLC in South Carolina
South Carolina LLC Name Costs
Selecting a name for your Limited Liability Company (LLC) doesn’t come with a price tag. In South Carolina, the approval of your LLC name is included when your Articles of Organization filing gets the state’s approval.
While you might have encountered information suggesting the necessity of LLC Name Reservations, this isn’t the case in the majority of states. Generally, forming an LLC doesn’t mandate a Name Reservation.
However, if you wish to secure a specific name for your LLC for a period leading up to 120 days before its formation, you can do so by submitting an Application to Reserve a Limited Liability Company Name along with a filing fee of $25.
South Carolina Registered Agent Costs
The fee associated with a registered agent in South Carolina can either be $0 or $125 per year, in accordance with state regulations that mandate appointing a registered agent during the LLC formation process.
A South Carolina registered agent, whether an individual or a company, serves as the recipient for legal paperwork and official notifications directed at your LLC. This agent is responsible for receiving legal documents and should have a physical street address within the state, with availability during regular business hours.
If you choose to be your own registered agent or designate someone you know for the role, there are no supplementary charges. Conversely, you have the option to engage a registered agent service, incurring an annual fee ranging from $100 to $300. However, these service providers offer additional valuable business services and the advantage of safeguarding your personal information.
Hiring a registered agent service is particularly beneficial under the following circumstances:
- You lack a physical address within the state (as per South Carolina’s requirement for registered agents to possess an in-state address)
- You desire to keep your address confidential in public records (this possibility depends on the specific service company chosen, as you might be able to use their address to maintain privacy)
South Carolina Operating Agreement Costs
There’s no cost associated with the LLC Operating Agreement ($0) in South Carolina.
An LLC Operating Agreement in South Carolina is a written agreement among the LLC Members outlining ownership specifics, management procedures, and profit distribution methods. Both Single-Member and Multi-Member LLCs are advised to create an Operating Agreement, retain it in their business documents, and provide copies to all Members.
While numerous websites typically impose fees ranging from $50 to $200 for LLC Operating Agreements.
South Carolina EIN Cost
Obtaining an EIN (Employer Identification Number), also referred to as a Federal Employer Identification Number (FEIN), for your LLC comes at no expense.
An EIN is essential for tasks such as filing income taxes, establishing an LLC bank account, and hiring employees when necessary. While numerous online platforms may charge service fees for this process, you can actually obtain an EIN for your LLC without any cost. The Internal Revenue Service (IRS) provides the option to file for an EIN online, a quick process that takes just a few minutes.
South Carolina LLC Taxes
Numerous categories of taxes are applicable to South Carolina LLCs, leading to a significant variation in the annual expenses incurred by owners.
A selection of these taxes paid by LLC owners encompasses:
Federal Income Taxes
When it comes to federal income taxes, the IRS provides a range of options for how your LLC is treated.
In the case of Single-Member LLCs, they’re treated as Disregarded Entities by the IRS. This essentially means that the IRS doesn’t require the LLC to file its own federal income tax return. Instead, the responsibility falls on the owner of the Single-Member LLC to file the return and handle the federal income taxes.
The way in which the LLC pays federal income tax depends on the ownership structure: If an individual owns the LLC, it’s taxed similarly to a Sole Proprietorship. On the other hand, if the LLC is owned by another company, it’s taxed as a branch or division of the parent company.
Multi-Member LLC Taxes
In the case of an LLC with multiple owners, known as a Multi-Member LLC, the taxation process shifts. The IRS treats these LLCs as Partnerships for tax purposes. This involves filing a 1065 Partnership Return and issuing Schedule K-1 to the LLC owners.
The Schedule K-1 outlines each owner’s share of profits, and this income “flows through” to the individual owners. As a result, income taxes are paid by each owner on their personal income tax return using Form 1040.
Husband and Wife LLC Taxes
In certain states, there’s an interesting option available for LLCs owned by a husband and wife. These states, referred to as community property states, allow such LLCs to opt for a tax filing status as a Single-Member LLC, known as a Qualified Joint Venture. However, it’s important to note that this option is exclusive to community property states, and states like South Carolina do not offer this choice due to not being community property states.
Electing Corporate Taxation
In contrast to the default taxation options, an LLC can choose to be taxed as a corporation. This choice involves making an election, and there are two primary types of corporate taxation: S-Corporation and C-Corporation.
To become an S-Corporation, the LLC can file Form 2553 with the IRS. This status can offer tax benefits to businesses with established profits, helping them reduce self-employment taxes. On the other hand, an LLC can elect to be taxed as a C-Corporation by filing Form 8832.
This election is relatively rare and is mostly chosen by larger employers seeking advantages in healthcare fringe benefits.
South Carolina State Income Tax
In South Carolina, the rules for state income tax differ based on the type of LLC. Single-Member LLCs typically do not file a state-level return; instead, the owner includes the LLC’s profits or losses in their personal state-level return.
For Multi-Member LLCs, there’s usually a requirement to file a state-level Partnership return. The LLC’s profits or losses are reported by the owners in their individual state-level returns.
Additionally, specific business taxes apply to various industries and business types within the state. For accurate and efficient handling of these taxes, seeking assistance from an accountant is recommended.
Local Income Tax in South Carolina
For individuals and LLCs operating in South Carolina, local income taxes may be applicable. Depending on your location, you or your LLC might need to file and pay local income taxes to the respective municipality, be it a town, city, or county.
Given the intricacies and variations in local tax requirements, it’s advisable to enlist the expertise of an accountant to ensure compliance and accurate filings.
South Carolina Sales Tax
Engaging in product sales to consumers in South Carolina often requires the collection of sales tax and obtaining a Seller’s Permit. This permit functions as a license that grants the right to collect sales tax on retail transactions within the state. It’s worth noting that terms like resale license, wholesale license, and sales tax permit are often used interchangeably to refer to the same permit.
Acquiring a Seller’s Permit can typically be done online through the Wisconsin Department of Revenue’s Business Tax Application. For further information on South Carolina’s sales tax regulations and requirements, resources from the South Carolina Department of Revenue (DOR) provide valuable insights.
Business Personal Property Tax
Businesses that possess personal property or lease equipment are obligated to file a Business Personal Property Tax return. This tax pertains to furniture, fixtures, and equipment that are owned and utilized for business operations. It’s important to exclude inventory, land, and buildings from this declaration.
The deadline for this tax return falls within four months after the conclusion of the business accounting period, which is often April 30th if the year-end corresponds to December 31st. Following the tax return filing, the State forwards an assessment to the County where the business is registered.
Subsequently, the County issues a tax bill to the business, with payment due to the County Treasurer by January 15th of the subsequent year. The process of establishing your account can be completed online through MyDORWAY or by submitting Form PT-100 via mail.
South Carolina LLC Payroll Taxes
For South Carolina LLCs with employees, fulfilling payroll tax obligations is essential. Payroll taxes encompass a range of taxes and filings, including federal and state income tax withholding, Social Security tax, Medicare tax, federal and state unemployment taxes (FUTA and SUTA), local or county deductions, and employee deductions.
As an employer, you’re tasked with establishing a payroll system, withholding the necessary taxes from employees’ wages, and subsequently submitting these taxes and filings to appropriate state and government entities. While it’s possible to manage payroll taxes independently, the intricate calculations involved can be complex and burdensome. Incorrect calculations could result in penalties and fines.
Many individuals opt to engage the services of a payroll company or seek assistance from an accountant to ensure accurate and compliant handling of payroll taxes.
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South Carolina LLC Cost FAQs
How Much Does It Cost to Open an LLC in South Carolina?
Initiating a South Carolina LLC requires a payment of $125, covering the singular filing fee for the LLC Articles of Organization. Depending on your LLC’s industry and location, there might be a necessity for business licenses in South Carolina, with costs for local business permits differing.
Furthermore, depending on the nature of your LLC’s operations, the acquisition of business insurance could also be necessary.
How Much Does an LLC in South Carolina Cost Per Year?
In contrast to the majority of states, not all South Carolina LLCs are obligated to make payments for an Annual Report fee. The requirement for paying a fee and submitting the report applies solely to LLCs taxed as S-Corporations. Thus, for most South Carolina LLC owners, state-mandated annual fees do not apply. In cases where a registered agent service has been enlisted, an annual subscription fee of approximately $125 must be settled each year.
Certain South Carolina LLCs might be subject to obtaining a business license, contingent on their industry and geographical location. To ascertain whether there are any annual renewal charges associated with the local business license, it’s necessary to consult the local municipality.
Should I Hire an LLC Formation Service?
Engaging a professional service firm for establishing your South Carolina LLC isn’t obligatory; the option to independently create your business entity is available. Nevertheless, for efficiency and to ensure accurate filing, we suggest considering ZenBusiness.
With commendable customer support, ZenBusiness offers the added benefit of free registered agent services for the initial year. Additionally, it provides supplementary services such as crafting an Operating Agreement and managing the Annual Report filing process.
Conclusion
In conclusion, establishing an LLC in South Carolina involves more than just the upfront fee. Navigating the financial landscape requires careful consideration of additional expenses such as essential documentation, the involvement of registered agents, and the management of critical elements like operating agreements and obtaining an EIN.
The significance of effective financial management cannot be overstated in these aspects. This is precisely where the expertise of specialized LLC services like ZenBusiness becomes evident.
Armed with insights into these diverse financial aspects and supported by the guidance of ZenBusiness, prospective business proprietors can confidently embark on their South Carolina LLC journey.
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About the author
Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.