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Starting your own Limited Liability Company (LLC) in South Carolina opens doors to new possibilities and independence. Still, worries about the costs might loom large. Launching an LLC goes beyond just submitting initial paperwork. However, the costs involved in forming your business can be more manageable than they first seem.
We’ll dive into the cost structure and explore top-notch LLC services like Tailor Brands. Our goal? To guide you smoothly through each step, highlight smart savings strategies to reduce expenses.
This article will help you understand the costs of setting up an LLC in South Carolina and steer you toward financial savvy and business success.
What Is the Cost of Forming an LLC in South Carolina?
The main expense of establishing an LLC in South Carolina is a $125 fee required for the electronic submission of your LLC’s Articles of Organization to the South Carolina Secretary of State’s Office.
South Carolina Foreign LLC Formation Costs
If you have an LLC registered in another state and want to expand your business into South Carolina, you’ll need to register your LLC as a foreign entity in the state.
The registration fee for a foreign LLC in South Carolina is $110. This involves filing an Application for a Certificate of Authority to Transact Business, which is essential for registering your foreign LLC in South Carolina.
Annual Cost for LLCs in South Carolina
When establishing and maintaining an LLC in South Carolina, consider the ongoing costs. Luckily, LLCs in the state are exempt from filing annual reports.
However, it’s required for LLCs in South Carolina to have a registered agent to receive legal notices. If you choose a professional registered agent service, expect to pay between $100 and $300 each year.
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How Much Does It Cost to Start an LLC in South Carolina With the Best LLC Service?
Tailor Brands LLC Formation Cost
In South Carolina, the basic LLC registration cost is $125, which might increase with additional options. Typically, processing takes 2 to 3 weeks. For faster service, expedited processing that takes 4 to 6 days is available for an extra $50, or you can choose a rapid 1 to 2-day processing for $100.
Tailor Brands offers various LLC formation plans. The Lite LLC plan, their most budget-friendly option, only covers the state filing fee and includes standard processing times. The Essential LLC plan costs $199 plus state fees and comes with expedited processing, annual compliance, and an operating agreement, with a yearly fee of $199 for ongoing services.
The Elite LLC plan, priced at $249 plus state fees, encompasses all the benefits of the Essential plan, plus additional features like a free business domain for a year, a DIY website builder, an online store, eight free logos, a digital business card, a business cards tool, and a social media post maker. An annual fee of $249 is necessary to continue these services.
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Additional Costs When Starting an LLC in South Carolina
South Carolina LLC Name Costs
Choosing a name for your Limited Liability Company (LLC) in South Carolina is cost-free. The state includes your LLC name approval when your Articles of Organization are accepted.
You might have heard that reserving an LLC name is necessary, but this isn’t typically required in most states. Generally, LLC formation service doesn’t demand a Name Reservation.
However, if you want to hold a specific name for your LLC for up to 120 days before you form it, you can file an Application to Reserve a Limited Liability Company Name with a $25 fee.
South Carolina Registered Agent Costs
In South Carolina, the fee for a Registered Agent can range from $0 to $125 annually, as state rules require appointing a Registered Agent when forming an LLC.
A Registered Agent in South Carolina, whether an individual or a business, is designated to receive official and legal documents on behalf of your LLC. They must have a physical street address in the state and be available during normal business hours.
If you act as your own Registered Agent or appoint someone you trust, there are no additional costs. Alternatively, you can hire a Registered Agent service, which typically charges between $100 to $300 per year. These services not only handle your legal notifications but also provide extra business registration services and help protect your private information.
Hiring a Registered Agent service is especially advantageous if:
- You don’t have a physical address in the state, meeting South Carolina’s requirement for a local address for Registered Agents
- You prefer to keep your address off public records. Depending on the service chosen, you might use their address to ensure privacy
South Carolina Operating Agreement Costs
In South Carolina, filing an LLC Operating Agreement comes at no cost.
This document details the ownership structure, management procedures, and profit distribution methods among LLC Members. It’s recommended for both Single-Member and Multi-Member LLCs to draft an Operating Agreement, keep it with their business records, and distribute copies to all Members.
Despite this, many websites charge between $50 and $200 to provide LLC Operating Agreements.
South Carolina EIN Cost
Getting an EIN (Employer Identification Number), also known as a Federal Employer Identification Number (FEIN), for your LLC, is free of charge.
An EIN is necessary for activities like filing income taxes, opening an LLC bank account, and hiring employees. Although many online services offer to handle this for a fee, you can acquire an EIN directly from the IRS at no cost. The IRS allows you to apply for an EIN online, which is a quick and straightforward process that only takes a few minutes.
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South Carolina LLC Taxes
Various types of taxes apply to South Carolina LLCs, which can significantly affect the annual costs for owners.
Here are some of the taxes that LLC owners in South Carolina may need to pay:
Federal Income Taxes
The IRS offers several tax treatment options for LLCs.
For Single-Member LLCs, the IRS considers them as Disregarded Entities. This means the LLC itself doesn’t need to file a separate federal income tax return. Instead, the owner of the Single-Member LLC is responsible for filing the tax return and managing federal income taxes.
The method of federal income tax payment for an LLC depends on its ownership structure: If owned by an individual, it’s taxed like a Sole Proprietorship. Conversely, if owned by another company, it’s taxed as a branch or division of that parent company.
Multi-Member LLC Taxes
For an LLC that has multiple owners, known as a Multi-Member LLC, the IRS treats it as a Partnership for tax purposes. This requires the filing of a Form 1065 Partnership Return and the distribution of Schedule K-1 to each owner.
The Schedule K-1 details each owner’s share of the profits, which “flows through” to their personal income. Consequently, each owner pays income taxes on their share of the profits through their personal tax return using Form 1040.
Husband and Wife LLC Taxes
In some states, there’s a unique option for LLCs owned by a husband and wife. These states, known as community property states, permit these LLCs to be treated as Single-Member LLCs for tax purposes under a status known as a Qualified Joint Venture. However, it’s important to remember that this option is only available in community property states. States like South Carolina, which aren’t community property states, don’t provide this option.
Electing Corporate Taxation
Unlike standard taxation setups, an LLC can elect to be taxed as a corporation. This involves choosing between two main types of corporate taxation: S-Corporation and C-Corporation.
To adopt S-Corporation status, the LLC must file Form 2553 with the IRS. This option can be beneficial for businesses with considerable profits, as it may help reduce self-employment taxes. Alternatively, an LLC can choose to be taxed as a C-Corporation by filing Form 8832.
Opting for C-Corporation status is relatively uncommon and is typically favored by larger businesses that benefit from specific advantages, such as healthcare fringe benefits.
South Carolina State Income Tax
In South Carolina, state income tax requirements vary depending on the type of LLC. Single-member LLCs generally don’t file a separate state tax return; rather, the owner reports the LLC’s profits or losses on their personal state tax return.
Multi-member LLCs, on the other hand, typically need to file a state Partnership return. The profits or losses of the LLC are then reported on the individual state tax returns of the owners.
Furthermore, certain business taxes specific to different industries and business types apply within the state. For precise and effective management of these taxes, it’s advisable to consult with an accountant.
Local Income Tax in South Carolina
In South Carolina, individuals and LLCs may be subject to local income taxes based on their location. Whether you’re in a town, city, or county, you or your LLC might need to file and pay local income taxes to the appropriate municipal authority.
Due to the complex and varying local tax regulations, seek the guidance of an accountant to ensure you meet all compliance requirements and file accurately.
South Carolina Sales Tax
If you’re selling products to consumers in South Carolina, you’ll likely need to collect sales tax and obtain a Seller’s Permit. This permit acts as a license allowing you to collect sales tax from retail transactions within the state. It’s important to note that terms such as resale license, wholesale license, and sales tax permit are often used interchangeably for this permit.
You can usually apply for a Seller’s Permit online through the South Carolina Department of Revenue’s Business Tax Application. For more detailed information on sales tax regulations and requirements in South Carolina, the resources provided by the South Carolina Department of Revenue (DOR) are a great help.
Business Personal Property Tax
Businesses owning personal property or leasing equipment must file a Business Personal Property Tax return. This tax covers business-use furniture, fixtures, and equipment but doesn’t include inventory, land, or buildings.
The filing deadline is within four months after the end of the business accounting period, typically April 30th for businesses closing their year on December 31st. Once the tax return is filed, the State issues an assessment to the County where the business is located.
The County then sends a tax bill to the business, which needs to be paid to the County Treasurer by January 15th of the following year. You can set up your account and complete this process online via MyDORWAY, or by mailing Form PT-100.
South Carolina LLC Payroll Taxes
For South Carolina LLCs with employees, managing payroll tax responsibilities is crucial. These taxes include federal and state income tax withholdings, Social Security tax, Medicare tax, federal and state unemployment taxes (FUTA and SUTA), as well as local or county deductions and employee deductions.
As an employer, your duties involve setting up a payroll system, deducting the necessary taxes from employees’ wages, and ensuring these taxes and filings are submitted to the relevant state and federal agencies. Handling payroll taxes on your own is possible, but the detailed calculations required can be challenging and error-prone. Mistakes may lead to penalties and fines.
To avoid these issues, many business owners choose to hire a payroll company or consult an accountant to manage payroll taxes accurately and comply with regulations.
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South Carolina LLC Cost – FAQs
Conclusion
In conclusion, setting up an LLC in South Carolina goes beyond paying the initial fee. It’s important to consider other costs like necessary documentation, hiring registered agents, and managing key elements such as operating agreements and obtaining an EIN. Effective financial management is crucial in these areas. This is where the expertise of specialized LLC services like Tailor Brands really shines.
With a clear understanding of these financial considerations and the support of Tailor Brands, aspiring business owners can confidently start their LLC journey in South Carolina.
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