What Is an LLC?

How to get an LLC in South Carolina is a topic that many business owners want to learn more about. A limited liability company in South Carolina is a business structure that passes both the profits and the losses to the tax returns of the individual members. Even though these companies are taxed at the individual level, the owners don't face personal business liabilities. 

In the articles of organization for most LLCs, the buyout provisions are described. These buyout provisions outline the circumstances under which it is acceptable for a partner to sell shares. Buyout provisions can also dictate to whom these shares can be sold. 

There are some LLCs that only allow members to sell their shares to other owners or to the actual limited liability company. The purpose of buyout provisions that have these limitations is to make ownership of the shares unavailable to buyers outside the company.

Many entrepreneurs, particularly those who lack experience, find the idea of starting a limited liability company from the ground up to be daunting. As a result, many of these entrepreneurs consider buying an established limited liability company.

There are two ways you can buy an LLC. The two methods for buying an LLC are as follows:

  • Have a new LLC set up and then buy up the assets of an already established LLC.
  • Make a bulk purchase, which means buying the LLC in its entirety.

How to Buy an LLC

If you don't have any LLCs in mind that are for sale, the first task on your to-do list is finding a business that the owners have put up for sale. Unfortunately, this can be difficult, particularly if you don't know where to look.

You should try networking with a trade group of local chamber of commerce in the industry in which you want to start your business. Look through business newspapers and trade publications for the relevant industry to find LLCs for sale. You can also network with business owners who are older and may be thinking about retiring.

Once you find an LLC for sale that is a good candidate, you should take a look at the articles of organization's clauses. Look for a clause that talks about buyouts. The clause should describe the circumstances under which the position of an owner can be bought out. Usually, these circumstances are bankruptcy, death, and divorce.

Another step that you should take is asking the LLC's current business owner to provide you with access to the books and records. Your goal is to learn more about the business, particularly when it comes to its operation and finances. Some things that you should ask for include tax returns, accounting books and ledgers, mortgages, loans, leases, employment agreements, business licenses, vendor agreements, and the LLC operating agreement. You can also search through the public records for property tax obligations, mortgages, and liens. 

Overall, your main goal is to gain a good understanding of the assets and debts of the business. Try to identify the expenses and revenues of the business. Figure out whether the business's profits have been on the rise or been going down. Learn more about the terms of any existing mortgages, loans, or leases. Consider whether the operating system puts restrictions on the sale of the limited liability company.

To make sure you make the right decision, you will need to review complex documents. As you probably imagine, legal documents are often difficult to comprehend and lengthy. However, it is essential that you understand these documents if you want to make an informed decision. Therefore, you should consider hiring a lawyer to help you understand these documents.

You should also think about hiring a CPA to help you decide a fair market value for the limited liability company. The CPA will also help you determine the value of the percentage of ownership of members.

To start negotiations, you should reach out to the manager of the LLC or to the members directly. Another option you have is contacting the registered agent. Your attorney can help you negotiate the terms of the buyout.

If you need help with how to get an LLC in South Carolina, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.