There are various types of business entities. Some examples are Sole Proprietorships, General Partnerships, Limited Partnerships, Limited Liability Companies (LLC), Registered Limited Liability Partnerships (LLP), and Corporations. In choosing which business entity to form, limiting personal liability is a primary concern. That’s why we think forming an LLC can be an attractive option.
The hallmark of LLCs is their flexibility. LLCs offer the protection of its members not being personally liable for debts or obligations. There are no restrictions on the number of persons or types of entities which can own membership interests in an LLC. Members in an LLC have freedom to allocate according to their wishes items such as profits, losses, income, or deductions. An LLC can elect whether to be taxed at the federal and state level as a corporation or as a sole proprietorship or partnership.
An LLC is run by either its manager(s) or member(s). Some of the steps involved in forming an LLC are (a) Naming the LLC; (b) Filing Articles of Organization; (c) Naming a Registered Agent and Designated Office; and (d) Drafting an Operating Agreement. There are no required formalities by statute, although it is highly advisable to at least have an operating agreement.
Naming the LLC
The name must contain “limited liability company” or “limited company” or the abbreviation “L.L.C.”, “LLC”, “L.C.”, or “LC”. “Limited” may be abbreviated as “Ltd.”, and “company” may be abbreviated as “Co.”
Filing Articles of Organization
The articles of organization set forth the name, designated office address, registered agent’s name and address, whether the LLC is at-will or term, and whether it is manager-managed or member-managed. There is simply a $110 filing fee to the Secretary of State.
Naming a Registered Agent and Designated Office
The registered agent must be an individual resident of South Carolina, a domestic corporation, another limited liability company, or a foreign corporation or foreign company authorized to do business in South Carolina. However, the designated office need not be a place of business in South Carolina.
Drafting an Operating Agreement
The operating agreement is not required, but in almost all cases, is appropriate and/or necessary. A typical operating agreement includes the naming of the members. Additionally, it determines the rights, duties, and obligations of any managers, and provides detail to any dissolution issues and procedures.
How We Can Help
The McCord Law Firm brings knowledge and experience to all business formation and planning needs. We advise on which business entity to choose, and provide legal support to forming your business in South Carolina. We also assist in filing articles of organization and can draft your operating agreement. Should you make the choice to convert your business into a different entity, we can guide you during that process as well. We offer help in reviewing contracts and legal documents for new businesses. Please contact us for any of your business formation and planning needs.