How to Transfer LLC Ownership in South Carolina: 2024 Updates


Steve Bennett
Steve Bennett
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Transfer LLC ownership in South Carolina

If you have an LLC in South Carolina and you wish to discontinue it, you don’t always have to dissolve it. You can transfer the ownership, and it will keep running the way it was. Transferring ownership of a Limited Liability Company (LLC) in South Carolina is a relatively simple and straightforward process involving minimal paperwork. It can be partially or fully transferred to another owner.

LLCBuddy editors shared a step-by-step guide on how to transfer ownership of an LLC in South Carolina. The steps might seem easy and doable. However, these are general steps and might need special attention for specific cities or regions in South Carolina. Hence, it is recommended to consult an attorney or legal expert before taking the steps.

How an LLC Ownership Structure Works in South Carolina

By now, you must know that a limited liability company is one of the simplest forms of business structure. The ownership and transferring it to others is even simpler. For an LLC in South Carolina or any other state in the United States, the company is considered an independent entity that is separated from its owners, which means the owners are not personally liable for the company’s debts or legal obligations.

The ownership structure of an LLC in South Carolina is determined by the percentage of ownership interests held by each member. These ownership interests can be distributed however the members see fit and are typically outlined in the Operating Agreement drafted in South Carolina.

There is no maximum limit on the number of members an LLC in South Carolina can have, and the members can be individuals, other LLCs, corporations, or even foreign entities. This flexibility allows for a wide range of business structures, from single-member LLCs in South Carolina to large, multi-member LLCs with complex ownership arrangements.

What is South Carolina LLC Buy-Sell Agreement in Ownership Transfer?

In South Carolina, the buy-sell agreement is a part of your operating agreement. It explains the instructions for buying and selling the LLC ownership. For example, who can be the member of South Carolina LLC, how will buy out and sell of the LLC be determined, whether the members of the LLC in South Carolina will buy the shares of the leaving owner, and how – these are the points you have in the buy-sell agreement. 

Buy Out South Carolina LLC or Partial Transfer: In this case, the members of the LLC generally buy the shares of the owner who is leaving. As the LLC buys the owner’s interests, the shares get divided equally among the remaining South Carolina LLC members. LLC members must approve the transfer, and then the Operating Agreement (OA) will be updated to exclude the departed owner.

If your LLC operating agreement does not specify these terms beforehand, you must follow South Carolina state LLC law. In some states, ownership transfer does not simply take place. Instead, they have to dissolve the LLC to continue with the process. So, while you’re forming an South Carolina LLC, make sure to create a buy-sell agreement beforehand.

Sell a South Carolina LLC Or Fully Transfer: Selling an LLC or Fully Transferring the ownership is a bit more complicated than the buy-out process. In this condition, owners have the independent legal right to sell the interest to any third party. They do not need other members’ approval for this. The negotiation between the buyer and the seller involves complexities if there is no operating agreement in the first place. As an owner, you must find a buyer, write the change of ownership letter, set out other formalities, and voila! Your ownership transfer is done. The parties will settle the sale contract, including the LLC price, following South Carolina state laws.

How to Transfer South Carolina LLC Ownership

When an LLC member decides to step down from the owner’s position, they must transfer the ownership to someone else. It can be other existing members of the LLC or a third party. Transferring LLC ownership in South Carolina is a common yet complex deed. LLC owners who want to transfer their ownership must follow some steps to do the task. Here are the following steps-

Step 1: Review Your South Carolina LLC Operating Agreement

An operating agreement is a kind of non-mandatory document in many states. In South Carolina, it is not mandatory to draft one. If you have one at the time of LLC formation in South Carolina, then it would be easier for the owners to transfer the name. If not, then it should be filed at the time of transferring ownership. The operating agreement for the LLC in South Carolina must be reviewed for the ownership transfer conditions and other legal requirements regarding the buy-out and sale of the LLC.

Step 2: Amend the South Carolina Articles of Organization

Changing/transferring ownership might lead to structural change at the managerial level. In that case, the LLCs must comply with the South Carolina Secretary of State. To do so, one must file the South Carolina Articles of Organization amendment. Specifically in Texas, LLCs must submit a Public Information Report annually to the Texas Comptroller of Public Accounts. The managerial changes will be explained there.

As soon as the ownership transfer negotiation is done and the agreement is made with the updated change of ownership, file it with the Secretary of State. For that, you must amend the Articles of Organization and get the Articles of Amendment. Make the changes to the existing Articles of Organization, get the amendment form, and submit it to the South Carolina SOS along with other documents and the filing fee. Read how to amend South Carolina Articles of Organization in a simple way.

Step 3: Spread the News

Once the legal formalities are done, and the ownership of your LLC is transferred officially in South Carolina, you must spread the word to the clients, partners, and other concerned people. Also, banks and other financial institutions should be notified about the ownership change. Business entities, vendors, and other officials you work with should also be notified. 

Step 4: Obtain a New EIN (optional)

You might need to apply for a new EIN based on the LLC ownership transfer. After officially transferring ownership, you must check with the IRS whether you need a new EIN. There is a formal form to notify the IRS about the LLC ownership transfer. Get the form from their website, enter the details, and submit it. You will get notified whether you need to apply for a new EIN. 

Why Transfer LLC Ownership in South Carolina

There can be several reasons why the transfer of LLC ownership in South Carolina takes place in any organization. Some of the most common reasons include the following-

  1. Death of the LLC owner
  2. Separation or Divorce of the LLC Owners
  3. LLC owners do not wish to continue their association with the organization
  4. LLC owners want to appoint a new member (owner)
  5. LLC owners want to sell the business off to someone else

These are some of the common reasons why an LLC ownership gets transferred in South Carolina. Transferring LLC ownership requires a comprehensive LLC operating agreement in South Carolina. This is an internal document every LLC should have at the time of formation. 

The Role of South Carolina Operating Agreement in LLC Ownership Transfer

Creating an Operating Agreement in South Carolina is one of the major steps in forming a limited liability company (LLC). However, many states do not require an Operating Agreement. California, New York, Delaware, Maine, Nebraska, and Missouri are the states where an LLC operating agreement is mandatory. 

Even when your state does not necessarily need you to file the operating agreement, it is recommended that you should have it to avoid any internal disagreements or issues in the future.

LLCBuddy Editorial Team

An operating agreement is an internal document explaining all the procedures, including ownership transfer, dissolution, LLC operation, members, and other LLC-related processes. Operations, such as dissolution and ownership transfer, occur based on those written regulations. 

If there is no South Carolina Operating Agreement or it does not have clear ownership transfer or buy-sell agreement provisions, the transfer takes place based on South Carolina state law. 

What to Include in South Carolina Operating Agreement

This official document outlines the company’s structure, the members’ details, the dissolution process, and a lot more. Hence, it is always wise to have one to avoid any confusion in the future, whether your state needs it or not. The LLC operating agreement should have the following points-

If your operating agreement explains all the above points, you must follow it for the ownership transfer. 

Reasons to Transfer South Carolina LLC Ownership

There can be many issues that lead to ownership transfer. One of the most common issues is the death of the owner. There can be other issues where transfer of ownership occurs. Here are some issues to consider, 

Divorce Or End of Marriage:  In some cases, according to the divorce decree, the ownership transfers to the spouse. If the LLC in South Carolina has an operating agreement and the ownership transfer condition is specified, then the LLC must follow the South Carolina operating agreement to proceed. 

Death of a Member: This is the most common issue in LLCs. In South Carolina, if a member dies, the ownership, by default, transfers to the legal heirs of the deceased person. However, in this case, the legal heirs (wife/husband/kids) do not get any managerial power or authority. They continue enjoying the benefits, such as a share of the profit and others. But they won’t get any other power in the company. In such situations, other members of the South Carolina LLC often buy out the deceased’s interests. 

Dissolution of South Carolina LLC: If any member/owner plans to leave the company, the LLC gets dissolved and reformed with the new policy and operating agreement. The members and managers make this sort of decision at the time of the creation of the operating agreement. 

FAQs

How do I transfer ownership of my South Carolina LLC?
Ownership of a South Carolina LLC can be transferred by following the procedures outlined in the operating agreement and state laws.
Do I need to update any legal documents when transferring ownership of my South Carolina LLC?
Yes, it is important to update the operating agreement, articles of organization, and any other relevant legal documents when transferring ownership of a South Carolina LLC.
Can I transfer ownership of a South Carolina LLC to a non-resident of the state?
Yes, ownership of a South Carolina LLC can be transferred to a non-resident as long as it complies with state laws and regulations.
Are there any filing fees associated with transferring ownership of a South Carolina LLC?
There may be filing fees associated with transferring ownership of a South Carolina LLC, depending on the specific circumstances of the transfer.
Can I transfer ownership of a South Carolina LLC to a family member?
Yes, ownership of a South Carolina LLC can be transferred to a family member. However, it is important to follow the proper procedures to ensure a smooth transfer.
What is the process for transferring ownership of a South Carolina LLC?
The process for transferring ownership of a South Carolina LLC typically involves obtaining approval from the existing members, updating legal documents, and filing any necessary paperwork with the state.
Do I need to have a written agreement when transferring ownership of a South Carolina LLC?
Yes, it is important to have a written agreement detailing the terms of the ownership transfer when transferring ownership of a South Carolina LLC.
Can I transfer ownership of a South Carolina LLC without the consent of the other members?
Generally, ownership of a South Carolina LLC cannot be transferred without the consent of the other members unless otherwise specified in the operating agreement.
Is there a specific form I need to use when transferring ownership of a South Carolina LLC?
There may be specific forms required by the state of South Carolina for transferring ownership of an LLC. It is important to check with the Secretary of State for more information.
What should I consider before transferring ownership of my South Carolina LLC?
Before transferring ownership of a South Carolina LLC, it is important to consider tax implications, legal requirements, and the impact on the business operations.
Can ownership of a South Carolina LLC be transferred?
Yes, ownership of a South Carolina LLC can be transferred.
How is ownership of a South Carolina LLC typically transferred?
Ownership of a South Carolina LLC is typically transferred through a sale of membership interest.
Do I need to amend the operating agreement when transferring ownership of a South Carolina LLC?
It is recommended to amend the operating agreement when transferring ownership of a South Carolina LLC to reflect the new ownership structure.
Are there any restrictions on transferring ownership of a South Carolina LLC?
Some South Carolina LLCs have restrictions on transferring ownership, so it’s important to review the operating agreement.
Is it necessary to notify the South Carolina Secretary of State when transferring ownership of a South Carolina LLC?
It is not necessary to notify the South Carolina Secretary of State when transferring ownership of a South Carolina LLC.
What documents are needed to transfer ownership of a South Carolina LLC?
Typically, a Bill of Sale or Membership Interest Purchase Agreement is used to transfer ownership of a South Carolina LLC.
Can ownership of a South Carolina LLC be transferred to a non-member?
Yes, ownership of a South Carolina LLC can be transferred to a non-member.
Are there any tax implications when transferring ownership of a South Carolina LLC?
There may be tax implications when transferring ownership of a South Carolina LLC, so it’s advisable to consult with a tax professional.
Is there a transfer fee when transferring ownership of a South Carolina LLC?
There is typically no transfer fee required when transferring ownership of a South Carolina LLC.
Can ownership of a South Carolina LLC be transferred to a trust?
Yes, ownership of a South Carolina LLC can be transferred to a trust.
How long does it take to transfer ownership of a South Carolina LLC?
The timeframe for transferring ownership of a South Carolina LLC can vary depending on the complexity of the transaction.
Can ownership of a South Carolina LLC be transferred to multiple parties?
Yes, ownership of a South Carolina LLC can be transferred to multiple parties.
Can ownership of a South Carolina LLC be transferred without the consent of the other members?
It depends on the terms of the operating agreement, as some agreements may require the consent of all members.
What happens to liabilities of a South Carolina LLC when ownership is transferred?
The liabilities of a South Carolina LLC remain with the LLC even after ownership is transferred.
Can ownership of a South Carolina LLC be transferred if the LLC is being dissolved?
Ownership of a South Carolina LLC can be transferred even if the LLC is in the process of being dissolved.
Is a public notice required when transferring ownership of a South Carolina LLC?
A public notice is typically not required when transferring ownership of a South Carolina LLC.
Can ownership of a South Carolina LLC be transferred if the LLC is involved in a lawsuit?
It is important to consult with legal counsel if a South Carolina LLC is involved in a lawsuit and ownership is being transferred.
Can ownership of a South Carolina LLC be transferred if the LLC has outstanding debts?
Ownership of a South Carolina LLC can be transferred even if the LLC has outstanding debts, but the debts remain with the LLC.
Can ownership of a South Carolina LLC be transferred if the LLC is in bankruptcy?
It is important to consult with a bankruptcy attorney if a South Carolina LLC is in bankruptcy and ownership is being transferred.
Do I need a lawyer to transfer ownership of a South Carolina LLC?
While not required, it is recommended to seek legal advice when transferring ownership of a South Carolina LLC.

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In Conclusion

As you all know, forming a limited liability company is much easier than forming a corporation, a partnership, or any other type of business. The ease of transferring ownership from one to another is one of the many reasons for entrepreneurs to start an LLC. In South Carolina, transferring LLC ownership does not need a lot of paperwork or steps. You must update the formation papers with the new ownership information, file the amendment to the formation document, tell people about it, and comply with the state.

Though it seems easy to file documents while transferring ownership, it could be more complex than just these steps. Based on the local regulations, nature of business, or some other administrative rules, transferring ownership in South Carolina might take more than what it looks like. It is recommended to consult a professional or attorney before you take such an important business decision.

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