Can a Minor Legally Form or Own an LLC in South Carolina?

High school athletes signing Name, Image, and Likeness (NIL) endorsement deals in Columbia, teen software developers building apps in Charleston, and young e-commerce founders selling apparel in Greenville frequently generate substantial revenue before their eighteenth birthday. Operating a growing teen enterprise as an informal sole proprietorship leaves personal savings and family assets exposed to lawsuits and commercial claims. Determining whether a minor can legally form or own an LLC in South Carolina requires separating state business registration rules from centuries-old common-law doctrines governing a minor's capacity to sign binding contracts.

Under the South Carolina Uniform Limited Liability Company Act of 1996, codified at S.C. Code Ann. § 33-44-202 and S.C. Code Ann. § 33-44-203, one or more persons may organize a limited liability company by delivering Articles of Organization to the South Carolina Secretary of State, Columbia. Because S.C. Code Ann. § 33-44-101 defines a person to include any individual without imposing an 18-year-old age requirement, South Carolina statutes do not explicitly prohibit a minor from organizing or holding a membership interest in an LLC. However, because S.C. Code Ann. § 33-44-104 preserves supplemental principles of common law and contract capacity, a minor operating an LLC alone quickly runs into severe banking and contract barriers.

Contract Enforceability Issues for Teen Entrepreneurs in South Carolina

In South Carolina, the legal age of majority is 18 years old pursuant to S.C. Code Ann. § 15-1-320. Under the common-law infancy doctrine affirmed by the South Carolina Supreme Court in Parks v. Lyons, 219 S.C. 40 (SC Supreme Court 1951), any contract entered into by an unemancipated minor under age 18-other than a contract for basic necessaries such as food, shelter, or medical care-is voidable at the sole option of the minor.

While the adult business party who signed the deal remains legally bound, the minor retains the right to disaffirm (cancel) the contract before turning 18 or within a reasonable time after reaching majority, although the minor cannot disaffirm only the burdens of an agreement while retaining its benefits, as noted in Dickert v. Aetna Life Insurance Co., 176 S.C. 476 (SC Supreme Court 1935). Furthermore, South Carolina strictly regulates how a teen's business debts can be ratified after turning 18:

• Mandatory Written Ratification at Age 18: Under S.C. Code Ann. § 63-5-310, no lawsuit can be maintained to hold a person liable upon any promise or ratification made after reaching full age to pay a debt contracted during infancy unless the ratification is made in a writing signed by the party to be charged.
• Commercial Counterparty Reluctance: Because commercial landlords, wholesale inventory suppliers, equipment lessors, and payment processors (such as Stripe, Shopify, and PayPal) know a 16-year-old or 17-year-old in South Carolina can legally walk away from a commercial contract, sophisticated companies refuse to execute agreements signed solely by a minor.
• Operating Agreement Vulnerability: In South Carolina, an LLC Operating Agreement under S.C. Code Ann. § 33-44-103 is a contract among the members. If two minors sign an Operating Agreement without adult structure, either minor could theoretically disaffirm the agreement during a dispute.

Parent-Managed LLC Setups in South Carolina

To give a teen entrepreneur legitimate ownership equity while guaranteeing that commercial vendors, landlords, and banks have an enforceable contract partner, South Carolina business attorneys frequently structure a Parent-Managed LLC (or Guardian-Managed LLC). Under S.C. Code Ann. § 33-44-203 and S.C. Code Ann. § 33-44-404, South Carolina allows an LLC to choose between two governance models:

• Member-Managed LLC (Default): Every member is an agent of the company with statutory authority to bind the LLC in the ordinary course of business under S.C. Code Ann. § 33-44-301. If the minor is the sole member, counterparties still face the risk of dealing with an underage signer.
• Manager-Managed LLC (Recommended for Minors): By checking Box 6 on Form F0006, South Carolina, Secretary of State, Articles of Organization, the company is designated as Manager-Managed, and one or both parents (adults aged 18 or older) are listed as the initial Managers and Registered Agent.

Under S.C. Code Ann. § 33-44-301 Subsection (b), in a manager-managed LLC, a member who is not a manager is not an agent of the company solely by reason of being a member. Instead, only the adult Manager has legal authority to sign commercial contracts, leases, merchant processing applications, and bank resolutions on behalf of the LLC. Meanwhile, the minor holds membership units (or beneficial ownership) and participates in day-to-day creative and operational tasks. Once the teen turns 18, the adult Manager can resign, the LLC can amend its Articles of Organization to become Member-Managed, and the 18-year-old founder can execute a formal written ratification under S.C. Code Ann. § 63-5-310.

Banking Limitations and the South Carolina Uniform Transfers to Minors Act (UTMA)

Even if the South Carolina Secretary of State, Columbia accepts an online LLC filing submitted by a minor, the new company cannot operate without a federal Employer Identification Number (EIN) and a dedicated commercial bank account to prevent commingling funds-a key factor in preserving the corporate veil under Sturkie v. Sifly, 280 S.C. 453 (SC Ct. App. 1984).

Commercial banks in Charleston, Columbia, Greenville, and Spartanburg almost universally prohibit anyone under age 18 from opening a standalone business checking account, obtaining a commercial debit/credit card, or signing a Depository Resolution. To solve both the banking hurdle and the ownership transfer issue, families utilize two legal mechanisms under South Carolina law:

• South Carolina Uniform Transfers to Minors Act (UTMA) Custodianship: Under the South Carolina Uniform Transfers to Minors Act, codified at S.C. Code Ann. § 63-5-601 and S.C. Code Ann. § 63-5-620, an LLC membership interest can be titled in the name of an adult (such as a parent) followed in substance by the statutory language: as custodian for [Name of Minor] under the South Carolina Uniform Transfers to Minors Act. Under S.C. Code Ann. § 63-5-660, the adult custodian holds full legal power over the custodial property that an unmarried adult owner has over their own property, eliminating any minority disaffirmance defense. Note that under S.C. Code Ann. § 63-5-605 and S.C. Code Ann. § 63-5-700, a custodial transfer by gift under the South Carolina UTMA continues until the beneficiary reaches age 21 (whereas transfers not made by gift or will terminate at age 18).
• Co-Owned Parent-Minor LLC Structure: Alternatively, a parent can hold a small voting membership percentage (such as 5% or 10%) alongside the minor's 90% or 95% economic interest while serving as the Manager and Responsible Party on Form SS-4, Federal, Internal Revenue Service, Application for Employer Identification Number, allowing the parent to open the commercial bank account and add the teen as an authorized view-only user or co-signer once permitted by bank policy.

Step-by-Step Process to Set Up a Teen's LLC in South Carolina

Whether your family lives in Charleston, Columbia, Greenville, Rock Hill, or Mount Pleasant, following these five steps establishes a legally compliant business structure for a young founder.

Step 1: Select a Manager-Managed Structure and Adult Registered Agent

Verify name availability on the South Carolina Business Entities Online portal and ensure the name includes an approved designator such as LLC or L.L.C. under S.C. Code Ann. § 33-44-105. Appoint an adult South Carolina resident (such as a parent or business attorney) or a commercial registered agent service as the Agent for Service of Process under S.C. Code Ann. § 33-44-108, since serving legal process on a minor requires dual service on a parent or guardian under S.C. R. Civ. P. § 4.

Step 2: File the Articles of Organization With the SC Secretary of State

Submit Form F0006, South Carolina, Secretary of State, Articles of Organization online or by mail to the South Carolina Secretary of State, Columbia along with the $110.00 statutory filing fee required by S.C. Code Ann. § 33-44-1204. Check Box 6 to specify that the LLC is Manager-Managed and enter the adult parent or guardian's name and street address as the initial Manager and Organizer.

Step 3: Draft a Customized Operating Agreement and UTMA Designation

Have a South Carolina business lawyer draft a written Operating Agreement (S.C. Code Ann. § 33-44-103) detailing the capital contributions, profit distributions, and management authority of the adult Manager. If the minor's membership units are held under the South Carolina Uniform Transfers to Minors Act (S.C. Code Ann. § 63-5-620), the Operating Agreement schedule of members should reflect the adult custodian phrasing, avoiding the need for a formal conservatorship in the Charleston County Probate Court, Charleston, the Richland County Probate Court, Columbia, or the Greenville County Probate Court, Greenville.

Step 4: Obtain an IRS EIN, Open the Bank Account, and Register With SCDOR

With the adult Manager or parent co-member acting as the IRS Responsible Party, apply online for a free Employer Identification Number via Form SS-4, Federal, Internal Revenue Service, Application for Employer Identification Number. Bring the stamped Articles of Organization, EIN confirmation letter, and Operating Agreement to a South Carolina bank to open the LLC business checking account. If the teen's business sells physical merchandise in South Carolina, register for a Retail Sales Tax License ($50 fee) with the South Carolina Department of Revenue, Columbia using Form SCDOR-111, South Carolina, Department of Revenue, Business Tax Application, and ensure any teen employment complies with child labor regulations enforced by the South Carolina Department of Labor, Licensing and Regulation, Columbia under S.C. Code Ann. § 41-13-20.

Step 5: Execute a Formal Written Ratification and Amendment at Age 18

Once the entrepreneur turns 18, execute a formal written Ratification of Operating Agreement and Company Contracts pursuant to S.C. Code Ann. § 63-5-310, and file an Amendment to the Articles of Organization (S.C. Code Ann. § 33-44-204, $110 fee) with the South Carolina Secretary of State, Columbia to transition management directly to the newly adult founder. Connecting with a South Carolina business formation lawyer through our directory ensures your family's LLC is structured properly from day one.

How Much Does it Cost in South Carolina?

Forming and maintaining a Parent-Managed or UTMA-structured LLC in South Carolina is highly cost-effective compared to other states:

• SC Articles of Organization Filing Fee: $110.00 payable to the South Carolina Secretary of State under S.C. Code Ann. § 33-44-1204.
• Annual Report Fee for Standard LLCs: $0.00. Standard South Carolina LLCs (taxed as disregarded entities or partnerships) do not file annual reports or pay annual franchise fees to the Secretary of State.
• South Carolina Retail License (If Selling Taxable Goods): $50.00 one-time fee paid to the South Carolina Department of Revenue.
• Transition Amendment Fee at Age 18: $110.00 to file Amended Articles of Organization removing the parent manager when the founder turns 18.
• Business Attorney Drafting Fees: Retaining a South Carolina business attorney to prepare a customized Parent-Managed Operating Agreement and UTMA custodial documentation typically ranges from $750 to $2,000.

How Long Does the Process Take?

When filed electronically through the South Carolina Secretary of State's Business Entities Online portal, Articles of Organization are typically approved within 1 to 2 business days (compared to 7 to 10 business days for paper mail filings). Obtaining an IRS EIN online takes 15 minutes, and drafting the Parent-Managed Operating Agreement and opening the commercial bank account generally takes 1 to 2 weeks.

Frequently Asked Questions (FAQ)