LLCs enjoy pass-through taxation where profits and losses are reported on individual tax returns, avoiding double taxation like with corporations where profits are taxed at both the corporate level and individual level. There is no state-level income tax on LLCs in South Carolina, which further reduces taxes paid by small businesses.
To form an LLC in South Carolina, you need to secure a business name with required phrases like "Limited Liability Company." You also need to designate a registered agent who will accept legal documents. Then you need to complete the Articles of Organization and file for an EIN.
State Taxes and Fees
The state general sales tax rate of South Carolina is 6%. Cities and municipalities can collect up to 1% additional sales tax. Rates may change depending on the type of purchase.
You need to pay the state filing fee to set up your LLC easily at a very low cost. These fees and charges can be tax deductible.
Business Structure Considerations
When choosing a business structure, consider liability, control, and taxes. LLCs are taxed as partnerships, while corporations are taxed as C-corps unless they elect S-corp status. LLCs have greater flexibility.
By default, South Carolina LLCs are taxed as pass-through entities. The members pay for the LLC’s losses and revenue on their personal income taxes, as well as the 15.3% federal self-employment tax rate. For LLCs with C-corp election, they pay the 5% corporate income tax.
Filing your Articles of Organization online takes 1-2 business days for approval. Filing by mail takes 2 weeks with postage. Establishing an LLC costs $110 for the Articles plus a $25 name reservation fee.
LLCs avoid double taxation of profits and benefit from not having a state-level income tax in South Carolina. You need to pay a low state filing fee to set up your LLC easily and at a reasonable cost. These fees and charges can be tax deductible.
The state sales tax rate is 6%, with the possibility of additional city sales taxes. Consider liability, control, and taxes when choosing an LLC over a corporation.
By default, South Carolina LLCs are taxed as pass-through entities. The members pay taxes on the LLC’s profits and losses on their personal income taxes and pay federal self-employment taxes. Some LLCs with C-corp election pay a 5% state corporate income tax.