Do you own a limited liability company (LLC) created in a state other than South Carolina, but you want to expand your business to the Palmetto State? If so, you’ll need to qualify your foreign LLC in order to transact business in South Carolina.
What is a foreign qualification and how do foreign LLCs function within the state of South Carolina? In this guide, we’ll answer these questions and more.
Rocket Tip: If you’d rather hire an online service to handle this process for you, many of the best LLC services can handle it for you.
What Is a Foreign Qualification?
A foreign qualification enables your limited liability company to do business in the state of South Carolina. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in South Carolina is the same regardless of where your domestic LLC is based.
The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. South Carolina state law does not define “doing business” in the state.
What Qualifies as ‘Doing Business’ in South Carolina
Since there is no definition of “doing business,” each business is evaluated on a case-by-case basis. However, in general, you will need to form a foreign LLC in South Carolina if your business pursues any of the following activities:
What Does NOT Qualify as ‘Doing Business’ in South Carolina
Meanwhile, South Carolina has adopted the Revised Model Act, which outlines certain activities that do not qualify as “doing business.” The following activities are not considered to be “doing business” in South Carolina, and you do not need to qualify a foreign LLC to pursue them:
Additionally, the state of South Carolina has added the following provisions:
How to Get Foreign Qualification in South Carolina
If you want to foreign qualify your LLC in South Carolina, you’ll need to file an Application for a Certificate of Authority with the Secretary of State. In addition to this form, you will need to include a Certificate of Existence that has been authenticated no more than 30 days prior to filing your application. The Application for a Certificate of Authority requires the following information:
Filing Fee: $110, with the check made payable to the “Secretary of State.”
What Is the Penalty for Not Getting Foreign Qualification in South Carolina?
If a foreign entity transacts business without first obtaining foreign qualification, they will be unable to file a lawsuit against a third party in a South Carolina court. This means that individuals and businesses could fail to honor contracts with your business, and you wouldn’t be able to do anything about it legally.
Should I Hire a Business Service Provider to File My South Carolina Foreign Qualification?
If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.
The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of South Carolina.
These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.
Obtaining foreign qualification in the state of South Carolina isn’t particularly complicated compared to some other states. However, you will need to acquire a Certificate of Existence from the authorities in the state in which your business was formed, which can delay the process by a few days or even weeks. Nonetheless, this isn’t a process that should be overlooked or taken lightly, because the penalties for not qualifying a foreign LLC in South Carolina can be severe ― especially if someone you do business with doesn’t live up to their end of a contract and you’re unable to sue them.
We hope this article managed to answer your questions about obtaining a South Carolina foreign qualification, and we wish you a prosperous business future!