If you own a business that was created in a state other than South Carolina, you will need to qualify or register that business in South Carolina if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-South Carolina) limited liability company (LLC) to do business in South Carolina.
For South Carolina purposes, if your LLC is formed in another state, then it is known as a foreign LLC in South Carolina. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Arizona is a foreign LLC in Colorado.
According to South Carolina’s LLC Act, you are required to register your foreign company with the state of South Carolina if you are “transacting business” in South Carolina. What does this mean? Well, like most states, South Carolina’s LLC Act does not specifically define the phrase “transacting business” in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, South Carolina’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
For the full, legal description of each of the listed items, check Section 33-44-1003 of the South Carolina Code. If your LLC’s only activity in South Carolina is one or more of the listed items, you should not need to register with the state.
To register your business in South Carolina, you must file an Application for a Certificate of Authority with the South Carolina Secretary of State (SOS). You can download a copy of the application form from the SOS website. (The full name printed on the form is Application for a Certificate of Authority by a Foreign Limited Liability Company to Transact Business in South Carolina, which is a mouthful.)
To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. More specifically, for a South Carolina application for registration, you need to provide:
You must include an original certificate of existence with your application. The certificate should be issued by the secretary of state (or equivalent official) in the state where your LLC is organized. The certificate must be no more than 30 days old.
You must file two copies of your application, including one original, signed form. The filing fee is $110.
If your LLC transacts business in South Carolina without authority, it cannot bring a lawsuit in the state. However, not being registered does not invalidate your LLC’s contracts or prevent it from defending a lawsuit in South Carolina. Also, a member of the LLC is not liable for the LLC’s debts and obligations solely because the company transacted business in South Carolina without authority.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in South Carolina are similar. You will, however, have to use a different application form. See the South Carolina Secretary of State website for forms, information, and filing instructions for registering a foreign corporation in South Carolina.