If you want to start a Limited Liability Company in South Carolina, then it’s important to research different filing types and compare their processing times. LLCs are a popular choice among business owners because formation is typically easier and faster than incorporation. But how long does it take to get an LLC in South Carolina? We’ll go over that, as well as tell you all about the formation process in our comprehensive guide.
Discovering South Carolina
In this section, we’ll learn more about what you can expect in South Carolina, starting with its geography. Learning more about the state can tell you everything from its climate to which types of business may perform well in the state.
South Carolina is shaped somewhat like a triangle and has borders with North Carolina, Georgia and Georgia. Some of the geography types you can find in the state include forests, mountains such as Sassafras Mountain which is the highest point in the state, Sandhills which are aptly named because of the sand that tops them, beaches, coastline, rivers and swamps.
Many people know about South Carolina because of its beaches, but over 67% of the state is covered in forests. Because of this, one of the state’s biggest natural resources is loblolly pine. It also produces much of the nation’s kaolin (a type of natural clay), mica, and vermiculite (which is used for insulation and in gardening.)
The tourism industry is big in South Carolina, with destinations like Myrtle Beach, Charleston and Hilton Head becoming popular vacation towns due to their beaches and golf courses.
Economic Overview of South Carolina
The GSP (Gross State Product) of South Carolina is $228.3 billion, and it had a growth rate of 18.6k% between 2018-2023, ranking its GSP growth 25th in the nation.
The industries that are the biggest in the state according to revenue are Hospitals, New Car Dealers, Automobile & Light Duty Motor Vehicle Manufacturing, Gas Stations with Convenience Stores and Professional Employer Organizations. The top 5 companies by employment are Walmart, Prisma Health, BMW Group, Compagnie Generale Des Etablissements Michelin, and Lowe's Companies Inc. And the top contributing sectors to the state’s GDP are Manufacturing, Real Estate & Rental & Leasing, Professional, Scientific & Technical Services, Healthcare & Social Assistance and Retail Trade.
Business Environment in South Carolina
Usnews.com has ranked South Carolina #30 for business environment, #35 for employment and #10 for growth. It’s ranked #30 for long-term fiscal stability, and #5 for short-term fiscal stability.
It has excellent infrastructure with only 8.5% of roads in poor condition, far less than the national 19%.
The state ranks #21 for affordability and #42 for economic opportunity. The cost of living index is 93.7 (national is 100.0), the state’s median household income is $59,318 which is quite lower than the national average of $69,717, and the poverty rate is 14.6%, above the national average of 12.8%.
State-Specific Regulations and Incentives for Forming an LLC in South Carolina
Here’s a look at some of the incentives and perks for business owners in South Carolina.
- Jobs Tax Credit: Businesses creating a minimum of 10 new jobs per month at its corporate headquarters, distribution, manufacturing, processing, agribusiness, warehousing or Research & Development facility can qualify for a credit between $1,500-$25,000 per job. Certain service-related facilities have to meet different job and wage criteria to qualify. If companies locate inside a multi-county industrial park then they can qualify for an additional $1,000 per job credit bonus. Credit amounts are based on the county’s development tier in the county it’s located.
- Port Volume Increase Tax Credit: There’s an income tax credit or a withholding tax credit available for warehousers, manufacturers, freight forwarding and handling companies, distributors and other companies which use a port facility in South Carolina. The company is required to have at least 75 net tons of non containerized cargo, 10 loaded TEUs, or 385 cubic meters transported in a year, then up that cargo value by 5% each year. The maximum credit allowance is $15 million per year.
- Green Initiative Credits: A plethora of credits are available to encourage the use of green initiatives. These credits are equal to 25%-30% of eligible expenses. Green initiatives include solar energy, recycling facilities, renewable energy, energy conservation, and the revitalization of textiles.
- Revitalization of Abandoned Building Credit: If you qualify for this credit, you may actually qualify for two different credits. Sites that qualify are buildings and structures with at least 66% which have been continuously closed or non operational for 5 or more years at the time of filing the rehabilitation notice. The credit can be used against income taxes and license taxes equal to 25% of the expenses for rehabilitation. The credit could offset 100% of the income or license tax liability, but cannot exceed $500,000 per tax year. Before incurring any expenses, you must file a Notice of Intent to Rehabilitate with the Department of Revenue. An additional credit for real property taxes is also available and is equal to 25% of eligible rehabilitation expenses. It can offset as much as 75% of property taxes for up to 8 years.
- Data Center Tax Exemption: If you operate a data center then you could qualify for an exemption for sales and use taxes if you invest a minimum of $50 million and create 25 jobs with a wage average of 150% of the county or state average wage, depending on which is lower. The investment minimum for a multi-tenant facility is $75 million. Both the investment and the job requirement must be met over a five-year period, and the jobs are required to be maintained for three years after that.
- Investment Tax Credit: If you’re a manufacturer that relocates or expands to South Carolina, you’re eligible for a one-time corporate income tax credit of as much as 2.5% of the new production equipment cost. It can be used to offset as much as 100% of the corporate tax liability, and can be carried forward for 10 years.
- Research and Development Tax Credit: This credit equals 5% of a business’s research expenses in South Carolina and can be claimed by qualifying businesses. The credit isn’t allowed to be used to offset any more than 50% of the company’s remaining tax liability after other credits have been applied. It can be carried forward for up to 10 years.
- Sales Tax Exemption: Intangible personal property, equipment for Research & Development, inventories, manufacturing equipment, and industrial electricity used for manufacturing all enjoy sales tax exemptions. Materials used in the construction of a distribution or manufacturing facility worth a minimum of $100 million which is invested over an 18-month period, are considered exempt from sales and use tax. New and expanding technology intensive companies that create a minimum of 100 new jobs in a 5 year period with average wages at or above 150% of the state average wage, with an investment of $300 million in real or personal property over 5 years, and 60% of that is required to be spent on computer equipment, can qualify for exemptions from sales and use taxes on the computer equipment. New and expanding recycling facilities investing a minimum of $300 million by its 5th year can obtain sales and use tax exemptions, as well.
Pros and Cons of Establishing an LLC in South Carolina
There are both arguments for and against starting an LLC in South Carolina. Let’s go through a few of each.
There’s no annual report requirement in South Carolina. This is typically both an annoying and costly requirement in many states. But the elimination of this requirement lowers business costs in the state.
Taxes are low in South Carolina. The corporate income tax is a flat tax of only 5%. Some LLCs choose to be taxed as S or C corporations, and in that instance they would have a low tax rate. Personal income tax rates for those being taxed as pass-through entities are between 0.00%-6.50%. There’s no state property tax, local income taxes are non-existent, you won’t have to pay inventory tax, and you won’t have to contend with either wholesale tax or unitary tax for worldwide products.
The unemployment rate in South Carolina is only 3.1%, which is lower than the national average of 3.9%. That’s great news for the state government because it makes them look good. But when it comes to business owners, it means that it can take a long time to fill empty positions and find qualified workers. It also means you’ll have to compete with other businesses in the state to fill positions, and you may not be able to afford the types of benefits necessary to attract employees to your company.
Procedure of Establishing an LLC in South Carolina
Forming a Limited Liability Company may seem like an impossibly difficult task. But don’t worry, our step-by-step instructions will get you through it in a snap!
- Get an Articles of Organization Form: The first step of your formation adventure is to obtain an Articles of Organization form, which is both your application to receive an LLC, and a declaration of formation. These forms are available from the Secretary of State.
- Choose a Business Name: It’s important that your business name meets all of the state’s legal requirements for business names. For instance, because you’re starting an LLC, your business name must contain language that indicates that such as “LLC”, “L.L.C.”, “Ltd.” or “Co.”. Once you’ve found a name you can use, you’re required to submit an Application to Reserve Limited Liability Company Name to the Secretary of State Corporations Division.
- Choose a Registered Agent: Your LLC is required to maintain what’s known as a “registered agent”. This is a person or business who receives mail and service of process on behalf of your company at their address. If a service of process is missed, your company could lose its good standing status and no longer be allowed to conduct business in the state. So this is an important decision. You’re allowed to designate a friend, family member or employee. Or if you’d rather have some peace of mind because this is such a crucial role, you could hire a professional registered agent service.
- Choose a Business Address: Not every business has a physical location, and this can be a problem. Your company’s business address will be listed on the public record, which can be a scary prospect if you’ve listed your home address as your business address. However, you could ask your registered agent for permission to use their address, or look into virtual addresses or virtual offices in your area.
- Sign and File Articles of Organization: Double-check that you haven’t missed anything and that all of the information on your Articles of Organization is correct before you submit it. You could also hire an LLC formation service to fill the forms out and file them on your behalf. Some have 100% accuracy guarantees, which can offer some additional peace of mind.
Necessary Documentation for Filing an LLC in South Carolina
These are the documents you should get together before you file.
- Business Licenses: The state of South Carolina doesn’t require businesses to obtain a general business license from the state government. But that doesn’t mean you don’t need any licenses and permits! You need to inquire with the county and municipal clerks in your area to find out licensing and permit requirements.
- Tax Registrations: Many business activities like hiring employees, collecting sales tax and selling goods will require you to register your business with the Department of Revenue. You can do so through the South Carolina Business One Stop website.
- Employer Identification Number (EIN): This is a tax identification number that is unique to your business, issued by the IRS. You’ll need one to open a business bank account, hire employees, or complete tax forms.
- Name Reservation Application: Unfortunately, choosing a business name is more difficult than just thinking of something catchy. Your business name can’t be the same as another business’s, or too similar. Since you can’t possibly know every business’s name in the state, you can run a search of business names on the Secretary of State website. Upon choosing an eligible business name, you must file an Application to Reserve Limited Liability Company Name with the Secretary of State Corporations Division.
- Operating Agreement: Operating agreements aren’t legal requirements for LLCs, but they’re vital internal business documents. They’re a type of contract between LLC members, as well as behavioral instructions and detailed directions on how your business operates. It lists things such as a list of LLC members along with their contact information, an explanation of their contributions and roles in the company, information about the distribution of profits and losses among members, a list of managers and instructions for them about voting rights and meeting schedules. And possibly most importantly, a section that clarifies how to remove or add new members, and what to do if an LLC member dies.
- Articles of Organization: Your company’s Articles of Organization is the primary formation document. You’ll need to submit two copies of it, one of which the Secretary of State will stamp with their seal and send back to you once it’s approved. It includes information about your business such as your business name and address, a list of LLC members and contact information, whether your company is member-managed or manager- managed, contact information for your registered agent and more.
Legal Requirements for Starting an LLC in South Carolina
The filing requirements and regulations for starting an LLC in South Carolina are pretty lax.
The main requirement is that every LLC must have a registered agent. Your registered agent must be at least 18 years old and have a physical address in the state. A P.O. box can’t be used. This is where important correspondence and service of process for your company will be delivered, then forwarded to you.
Time Frame for Establishing an LLC in South Carolina
Here’s a look at the formation times in South Carolina to give you an idea of what you can expect.
How Long Does the Initial Paperwork Take in the State of South Carolina?
Approval time, or the turnaround time it takes to get your LLC approved from the time the documents are submitted and including both transit and processing time, to file by mail is 3-4 business days and 1-2 business days to file online.
Processing Times in the State of South Carolina
Processing time, or the time it takes for the Secretary of State to review your documents and enter all of the data into their computer system, takes 3-4 business days for mail filing, or 1-2 business days for online filing.
Common Delays in the LLC Formation Process in South Carolina
Even if you file with lightning-fast speed, there are still factors that could slow the formation process.
- Technical Issues: If computers or servers are down at the Secretary of State’s office, or the power goes out, then processing times will be delayed until these issues are resolved.
- Timing: Your filing will only be processed on a business day, which rules out both holidays and weekends. Filing on or before either will slow processing times. Also, nearly everyone files at the beginning or end of the year which bogs down the system and creates delays. If you have the option, you should wait and file shortly before or after these known high filing times to prevent delays.
- Document Issues: Your documents must meet perfectionist standards when you submit them. If you accidentally leave out information, skip a section, make a typo, provide incorrect information, or even forget to submit two copies of your Articles of Organization, your documents will be rejected. It’s a shame when that happens because the smallest of errors could mean that you’ll have to start the formation process again.
Expedited Processing for LLC Formation in South Carolina
If you want to form an LLC in a hurry, then expedited processing is certainly a good choice.
What Are the Expedited Options Available?
Sadly, expedited services aren’t available in South Carolina.
Additional Costs for Expedited Services in South Carolina
Even though there aren’t any expedited service options available in South Carolina, it’s worth noting in case you choose to form an LLC in another state that expedited service fees are extras, which means you must pay them in addition to filing fees.
Comparing LLC Formation Time Frame in South Carolina with Other States
It’s important to compare South Carolina’s formation time frames with other states so that you can clearly understand them. It’s also helpful if you’re choosing between a domestic and foreign LLC. Here’s all the information you need.
Brief Comparison with Key States
Again, processing times to file by mail are 3-4 business days, or 1-2 business days if you file online and there aren’t expedited services available.
Part of the reason that expedited services aren’t available in South Carolina is because you can get an LLC in 1-2 days if you file online. But there are faster options. In Alabama, Alaska, Colorado, Kansas, Kentucky, Minnesota, Missouri, New York, South Dakota, Tennessee, Wisconsin and Wyoming, online filings are processed immediately. Mail filings in South Dakota, Massachusetts, and Alabama are processed in 1-2 days. It’s 1 day in Ohio and Kentucky. And West Virginia, Pennsylvania, Nevada, Montana, Michigan and Delaware all have 1 hour processing.
There are slower options, as well. If you file online in Arizona, processing times can take 14-16 days. And mail filing in New York takes 8 months to process. Maryland has expedited processing that takes 7 days, too.
Why is South Carolina a Favorable Place for Forming an LLC?
South Carolina is a rewarding place to form an LLC because it doesn’t require LLCs to file an annual report, and it has low tax rates and doesn’t impose a number of taxes that other states do.
