South Carolina is a popular vacation destination, especially in the American southeast. Myrtle Beach is a big draw for tourists. South Carolina, though, also has great universities and a rich sense of history dating back to before the founding of the nation. It makes sense, then, that any number of businesses could succeed in this state.
One of the best ways to start a new company is to form an LLC. As you might have guessed, though, that takes money. We’re here to help you figure out what you need to spend, as well as the optional purchases that can make running your company as simple as possible.
This article will help you make a budget for starting an LLC in South Carolina.
- The required costs for every LLC
- Extra costs we recommend you incur
- The different ways you can form your LLC, as well as the pros and cons of each
Total South Carolina LLC Cost – $110
South Carolina’s LLC laws are fairly simple. The total required cost just to start an LLC is $110 for the LLC’s articles of formation.
See the South Carolina Secretary of State’s fee schedule for more information.
Keep in mind that you will likely need to do more than just legally form your business entity. Many owners find that they need to pay local costs for licenses and permits. Several optional services are often crucial to getting a company off the ground. We’ll discuss these in greater detail below.
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How Much it Costs to Start a South Carolina LLC – The Details
Paying $110 for your articles might get you started, but there is a lot more you need to know to be successful with your new LLC. Further, it often makes sense to pay a little more for some extra services to make starting your company a little easier.
Articles of Organization Filing Fee – $110
The articles of organization create your LLC. Without them, it doesn’t exist. After they’re filed, your LLC can buy, sell, borrow money, and conduct other lawful business. Thus, making sure that you have the legal document correctly drafted and filed is your first major step.
South Carolina’s required articles are pretty easy to draft. Though you can put in a lot of legal terms if you want, you only need to include a handful of different items required by state law.
You can put other items in there as well, including terms that would normally go in an operating agreement, which we’ll discuss further below. We strongly recommend, however, that you keep your articles and your operating agreement as separate documents.
The point of an operating agreement is that it is the sole contract listing the rules of your company. Putting those rules in your articles not only makes them public knowledge but also creates a possible conflict if you ever make an operating agreement in the future (for instance, if you get partners).
If there is a conflict between the articles and the contract, the law decides which document to use. Then, you’ve lost control of the situation, and your business might suffer as a result.
Simply put: if you have all your rules in one contract, you stay in control. If you ever run into trouble, you’ll be thankful for that control. Thus, you should just use your articles to set things up, and use an operating agreement for the other stuff.
If this also sounds too confusing, there’s a tried-and-true shortcut. Just download a fill-in-the-blank form for your articles from the Secretary of State’s website. The filing fee is $110.
If you mail your articles for filing, the Secretary of State estimates that your filing will be processed two to three business days after it is received. That means that mail filing can take a week or longer to complete.
If you file your articles online, you can usually get same-day or next-day service. For this reason, expedited service isn’t needed in South Carolina.
South Carolina LLCs – Optional Costs to Consider
Beyond the bare minimum, you need to think about paying a bit more for things that will make your life easier.
Registered Agent Fee – $100/year for a registered agent service
The first “optional” cost you’ll want to consider is a fee for a registered agent. Though naming an agent and their office is required by South Carolina law, you get to decide if you will do it yourself or hire someone else.
Your South Carolina registered agent is a person or company you name that makes their address publicly available. You need to have an agent so that, if the state or someone else needs to contact your company, there is one place they can always go. Though it’s not fun to think about being sued, if that happens, your agent is the one that gets the legal papers.
Many owners are tempted to serve as their LLCs’ agents to save a bit of money. This is not a good idea. It involves making your address public and being constantly available just in case someone wants to sue your LLC.
It’s an easier and more cost-efficient plan to hire a South Carolina registered agent service. These agents usually charge $100 per year and take care of all your registered agent needs. It’s money well spent.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement – Variable
An operating agreement is a contract that sets down the rules of your LLC. It says how the people in charge should do their jobs, when meetings must be held, how members can enter and exit the LLC, and almost any other thing you can think of.
Unlike some other states, South Carolina won’t force you to have one if you don’t want it. But we strongly urge you to think about it. Without one, you have much less control over what happens to your company in stressful times.
As discussed above, you can use your articles for the same purposes as an operating agreement. We don’t recommend that, though. Also, because your articles are filed with the state, any changes to them will most likely require an extra filing fee.
If you choose to have a separate LLC operating agreement, though, you don’t have to file it with the state. You can write it yourself, but unless you are a lawyer or know for sure what it’s supposed to look like, we don’t recommend that option.
A lawyer would likely charge you by the hour for drafting an operating agreement. While a contract drafted by a lawyer would likely be a good one, that could also run you at least a few hundred dollars. You can have a good contract drafted, though, for as little as $39.
DBA fee – varies (based on local business license requirements)
Many owners find, after filing their articles, that they didn’t quite get the name they wanted for their LLC. Or sometimes, after they’ve started the business, they need to tweak their LLC name a bit so that it isn’t confused with a competitor.
These problems come up fairly often, and there is a simple solution for them. You can get a fictitious business name for your LLC, also known as a “doing business as” name (DBA). Though this is a very common procedure, it is a bit different in South Carolina than it is in other states.
The South Carolina Secretary of State does not keep a registry of DBA names. That means that you must go to the city or county governments of the places where you do business and, when you register for a business license, indicate the business name you will be using with the public.
This process will be a little different between the various local governments. For example, see Richland County’s guidance on DBAs here. That guidance indicates that the process of getting a DBA is a part of the business license application process in South Carolina. Thus, the exact fees and process will change based on where your LLC is located.
Name Reservation Fee – $25
Maybe you have a great plan and the perfect name for your LLC, but you’re not quite ready to start the business. If you want to make sure that a certain business name is still available, you can file an Application to Reserve a Limited Liability Company Name with the Secretary of State. (Find the downloadable form here.)
After you’ve filed the request, you must file your South Carolina articles of organization within 120 days, at which point your LLC name reservation will expire and cannot be renewed.
Domain Name – about $20 per year
In this day and age, you need a presence on the Internet. The first step in creating a good website is to get your own domain name. While this might have been pricey in the past, it is now quite affordable.
You should secure your domain name as soon as you can, even if you don’t have plans for a website right now. If you don’t, a competitor could buy your ideal domain and its variations to block you from using them. Domain squatters also sift through newly registered LLC names and will buy their domains only to relist them with huge markups.
In general, a domain ending in .com will be more expensive than a .net or .info domain, and some names will likely be taken, meaning you will have to do some searching (and perhaps some compromising).
A domain name from GoDaddy.com or a similar registrar may cost you between $20 and $50 per year, with regular specials and sales where you can get big discounts.
Registering with the State Tax Office – $50 or less
Though LLCs in South Carolina typically don’t pay income tax, there are a lot of taxes you may still have to pay the state. You’ll also have to get a withholding number and, if your LLC sells “tangible” goods, a retail license.
For all of these needs, you will need to register with the South Carolina Department of Revenue. Though a withholding number and registration itself won’t cost anything, the retail license will cost a one-time fee of $50.
Business License – Varies
In addition to the retail license you need to buy from the South Carolina Department of Revenue, you may also need to get a local business license. (There is no statewide business license in South Carolina.) The state does advise, though, that you will need to go to the state and county authorities where your LLC is based to check on the local requirements.
The City of Myrtle Beach, for example, has a fairly detailed process that can be accomplished both in person and by mail. (The cost will vary depending on a business’s exact needs.) You’d also have to register with Horry County.
Also, keep in mind that many types of businesses need professional licenses. You will have to ensure that your LLC meets all the requirements of your governing body in addition to any general requirements with its city and county.
Getting an Employer Identification Number (“EIN”) — Free
An EIN is a number created and assigned by the Internal Revenue Service to a business for paying taxes. (Think of an EIN as a social security number for a business.)
Regardless of whether the IRS says you need one, we recommend that you get an EIN. Many banks won’t allow your company to have its own business bank account without one. Having an EIN can also be important when your business is trying to get credit.
You can apply online and get an EIN for free in minutes, or you can apply for one through the mail or fax. Whatever you do, don’t pay someone else to get an EIN for you. It’s too easy to pay someone else to do it unless it is part of a broader service package.
Read More: How to Get an Employer Identification Number in South Carolina
Foreign LLC Qualification Fees — about $100 per extra state
If your business starts doing well, you may want to expand. If one of the places to which you expand is in another state, you’ll have to pay to do business there. You won’t have to form your LLC again, but you will have to register with the Secretary of State there as a foreign limited liability company and pay some extra fees.
The exact fees will depend on the state in which you are registering. As a rule of thumb, expect to pay about $100 in filing fees to register your limited liability company as a foreign LLC in another state.
Writing Formation Costs Off
The costs we’ve discussed so far are vital to forming and running your South Carolina LLC. For that reason, they can be deducted from your taxes as business startup costs. The IRS has a lot of guidance on this matter, and you should compare your specific costs to the materials on the IRS website.
In most cases, an LLC is taxed as a pass-through entity. In other words, your income and deductions will go on your personal taxes, rather than a separate income tax return for the LLC. The IRS allows LLC owners to deduct $5,000 of their business startup expenses in the first year.
South Carolina adopts the federal deduction scheme as it applies to start-up expenditures. See Title 12, Chapter 6 of the South Carolina Code of Laws for more information.
Myrtle forms an LLC in Myrtle Beach for a shop to sell sea shells. In a fit of whimsy, she names her company Myrtle’s Myrtle Beach Beach Shells LLC, which she wants to shorten on her sign to MMBBS. MMBBS will be a small shop, and Myrtle will be the only person working there.
Myrtle has to get a business license from the city and the county, each of which quotes her a $50 fee for their respective licenses. She also has to get a retail license from the state for another $50. As part of those applications, Myrtle states that she will use the DBA MMBBS.
Rather than put all of her company’s rules into the articles of organization, Myrtle has a formation service prepare an operating agreement for her. She also decides to hire a registered agent service to handle the legal communication aspects, so she can focus on selling shells.
Finally, Myrtle buys a web domain, MMBBS.com, to advertise to tourists visiting her city.
Her formation costs are as follows:
- South Carolina LLC Articles of Organization: $110
- Registered agent company fee (first year): $100
- Business licenses (county and city): $100
- Retail license: $50
- South Carolina LLC operating agreement draft: $39
- Web domain costs (first year): $50
For income tax purposes, Myrtle has elected pass-through taxation for her LLC. So, the IRS and the state will tax her directly for the money she gets from her LLC. She’ll then claim her startup deductions on her personal tax returns.
The total amount of Myrtle’s deduction in this example is $449. Before the deduction, her total taxable income for the year was $30,000. After the write-offs, the taxable income went down to $29,551.
In South Carolina, Myrtle would be in the 7% tax bracket, meaning that the $449 would save her $31.43 in state taxes. On her federal taxes, where Myrtle is in the 12% tax bracket, she would save $53.88. Thus, her total tax savings from write-offs is $85.31.
Keep in mind that if Myrtle had spent more than $5,000, she would likely be able to write off all of that money, but not all in the first year. Instead, he would have to break out her deduction over multiple tax years.
Cheapest Way to Start an LLC in South Carolina
Now that you know the costs, the question remains: what’s the cheapest way to go, while still making sure you aren’t cutting corners? Here are your options.
LLC Formation Service – $39 + state fees
A business formation service is a popular and inexpensive way for new LLC owners to get started.
These companies help entrepreneurs bring their visions to life. They have not only the knowledge of all the state laws you need to know, but also forms, documents, and procedures to make your life as easy as possible.
Formation services are a good way to handle formation needs for most LLCs.
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the forms, information, and expertise you need right on hand.
- They don’t cost much. Because these services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the services’ products and procedures have been tested hundreds of times over in the real world. That fact should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business arrangement already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
While formation services can be great for most people, they are not always the best choice. Some cons for these services are:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy products you don’t need. Even when you are using the service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Attorneys are licensed, reliable, and powerful resources for business formation. They are also quite pricey. A good business lawyer will usually charge hundreds of dollars in fees. When you’re just starting and have a limited income, that’s usually not a wise use of your funds.
A wealthy LLC owner, though, could benefit from having an attorney if their business was at all complicated. For that reason, a few choose this option.
Despite the expense, sometimes hiring a lawyer is the best choice.
- Lawyers help you manage risk. An LLC with complicated legal issues needs a lawyer. If Myrtle were selling timeshares instead of seashells, the additional laws and regulations might require her to get a lawyer to make sure everything is okay.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
For most people, getting an attorney comes with considerable downsides that outweigh any benefits.
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very caring people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Many people, after searching the Internet for the information they need, decide to try forming their new LLCs themselves. This process can make you an expert, but remember that time is money. If you are spending hours on your business formation, that’s time you’re not spending on the substance of your business.
In most instances, then, it is more cost-effective to just pay an LLC formation service, with confidence that everything has been done correctly, rather than try to reinvent the wheel yourself.
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t figure out the value of your time, a DIY solution is the cheapest option.
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that then costs them more time and money.
- It’s a headache. State workers are very helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual South Carolina LLC Fees: How Much Will it Cost to Maintain your LLC?
Once you’re off the ground, you will have to pay money every year to keep your company in good standing with the state. You’ll also have to pay money to make sure that your LLC gets the services it needs. The items you will need to pay for include:
- Registered agent service fee: $100
- Domain name: $20
If you have chosen pass-through tax treatment for your LLC (as most people will), you likely won’t need to file an annual report. Different kinds of LLCs may have different requirements, though. Make sure you check with your accountant to figure out exactly what the requirements are if you have a different kind of tax treatment for your entity.
Also, keep in mind that any small business should have an accountant. Costs for accounts vary significantly, but you should spend an average of $2,000 to $3,000 per year on an accountant in most cases.
How Much are LLC Taxes in South Carolina
By default, South Carolina treats LLCs as pass-through entities, meaning that the LLC itself is not taxed on income. Rather, that income is taxed when it is paid to the individual members.
You can opt for a different treatment if you wish, and your LLC can pay the corporate income tax instead. If you think that you may want to do this, you should speak with a South Carolina lawyer or accountant.
If your LLC has employees, you will need to pay employer taxes (including uninsurance) and withhold taxes as well. Visit the Department of Revenue website for more information regarding employer taxes.
While you’re there, you should also get information about sales and use tax, which you will have to pay if your LLC sells any goods or services, which it most likely will.
South Carolina LLC Formation Costs Quick Links
- City of Myrtle Beach — Business License Division
- Department of Revenue — Business Registration
- Department of Revenue — Sales
- Department of Revenue — Withholding
- Horry County — Business License
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Richland County Government — Information About DBAs
- Secretary of State — Business Name Search
- Secretary of State — Downloadable Paper Forms and Fee Schedule
- Secretary of State — FAQs About Business Entities
- Secretary of State — Online Filings
- South Carolina Business One Stop — County Business License Quick Chart
- South Carolina Business One Stop — Professional Licensing
South Carolina LLC Formation Costs FAQs
How much does it cost to start an LLC in South Carolina?
The minimum cost is $110. You have to pay this to file the articles of organization for your LLC.
What is the cheapest way to start an LLC in South Carolina?
A do-it-yourself approach will have the lowest price tag, but it isn’t the cheapest in terms of your time. The best balance of price and time, for most people, is to use an LLC formation service.
Do I need to hire an attorney to form an LLC in South Carolina?
No. Most people will not need to invest the considerable expense and time of hiring a lawyer. A formation service or a DIY approach will work for most business owners.
Can I pay to form an LLC more quickly in South Carolina?
Yes. Formation services will generally complete formation tasks faster than business owners acting on their own. The state itself offers fairly quick service on its filings, so there is no option to expedite those filings.