Many future business owners ask the question: Does South Carolina law allow single-member LLCs? The answer is yes. South Carolina does allow business owners to register a single-member limited liability company (LLC), but there is one condition that must be met for a business to qualify as a single-member LLC– it can have only one owner.
The primary characteristic of a single-member LLC that differentiates it from a multi-member LLC is that it has one member. If a single-member LLC adds a member, it becomes a multi-member LLC.
There are many benefits to owning a single-member LLC over a multi-member LLC that business owners should consider when weighing their options for forming a business. The owner of a single-member LLC has full control of the company. Also, a single-member LLC offers the same flexibility as a partnership but with limited liability personal protection. This safeguards the owner’s personal finances and assets from the debts and obligations of their business.
A multi-member LLC also affords limited liability protection, but both the decision power and control of the business are shared among members, as are the profits and pass-through taxes. The liability both single-member and multi-member LLC business entities give their owners, however, can be challenged in certain situations.
In order to avoid their liability being challenged, LLC members/owners should keep their distance when it comes to mixing personal finances and business finances. It’s always a good idea to keep detailed records, follow the laws that pertain to your LLC and your business, and consult with an attorney anytime there is a question regarding what you can do within the confines of the law to reach the goals you have set for your business entity.
Conversely, a sole proprietorship does not afford the owner(s) personal protection. In fact, a sole proprietorship is quite the opposite in that the owner is typically held personally liable for the debts and obligations of the business.
Additionally, a single-member LLC is more flexible and easier to manage. The documents required to govern and manage a single-member LLC are also less complicated and more manageable. Single-member LLCs have additional flexibility in terms of filing tax returns, as well.
Single-member LLCs can use the Social Security Number (SSN) of the owner, though an Employee Identification Number (EIN) may be preferred to maintain the safety of the owner’s SSN. EINs are free and issued by the IRS.
As mentioned above, one of the most enticing benefits of a single-member LLC is that with only one member, there’s no question regarding decision-making or shared responsibility for business decisions. One owner holds all the control. There is one exception, though, and that is when a married couple acts as a single member within a single-member LLC and files a joint tax return.
The process of establishing a single-member LLC in South Carolina is very much like establishing a multi-member LLC. For anyone who is not familiar with this process, the steps are listed below with a summary of what they entail. If you have any questions or feel overwhelmed by the process, speak with a reputable South Carolina business law attorney who can explain LLCs and the process for forming a new business via an LLC.
Step 1 – Craft the Company Name – Determining a name for your LLC must be a careful and thoughtful process because a newly formed business can’t have the same name as any other registered SC business. Furthermore, there are specific requirements the name must meet.
Step 2 – Name a Registered Agent – A registered agent will maintain a physical and mailing address on file with the state and be responsible for the receipt of any legal notices on behalf of your LLC.
Step 3 – File the Articles of Organization with the South Carolina Secretary of State. – Submit this specialized form to the SC Secretary of State.
Step 4 – Obtain an EIN – You can get this number from the IRS, and it is necessary for tax purposes.
To learn more about forming a single-member LLC in South Carolina, consult with a reputable business law attorney. It is better to be knowledgeable going in than to realize you made a mistake later. The latter will cost you and your business time and money.
A: South Carolina offers more flexibility to single-member LLCs when it comes to filing taxes. The LLC does not pay taxes; rather, the owner of a single-member LLC reports profits on their individual tax return because profits pass through to the member.
A: The steps for forming a single-member LLC in South Carolina are the same as those required to form a multi-member LLC. Start by choosing a name that meets the requirements, then file the Articles of Organization with the SC secretary of state.
A: No, an operating agreement is not a mandatory requirement for forming a single-member LLC, and while it may be more beneficial for a multi-member LLC, it’s never a bad idea to establish an agreement of operations because it can only benefit your company in the long run.
A: Requirements for an LLC include registering a unique LLC name with the South Carolina Secretary of State that meets the requirements for a business name in SC. Then, a registered agent is appointed, the Articles of Organization are submitted, and an Employer Identification Number (EIN) is obtained. Establishing an operations agreement is optional, and while it is a good idea, it is not a requirement for forming an LLC in South Carolina.
If you have more questions about forming a South Carolina single-member LLC, Mack & Mack Attorneys can answer them. Our experience makes us a premium choice for business law legal services in South Carolina. Contact Mack & Mack Attorneys to learn how our firm can help you form a single-member LLC in South Carolina.