Starting a Corporation in South Carolina | What You Need to Know


Steve Bennett
Steve Bennett
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Start a Corporation in South Carolina

In South Carolina, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in South Carolina, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in South Carolina.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in South Carolina?

A corporation in South Carolina is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in South Carolina are required to have at least Three directors. One of the main advantages of a corporation in South Carolina is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in South Carolina is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in South Carolina if you would like to provide limited liability protection to your shareholders rather than South Carolina LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in South Carolina

To start a corporation in South Carolina, you must follow the below steps that, include choosing a corporate name, hiring a Registered Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with South Carolina naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in South Carolina-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the South Carolina Secretary of State‘s business name database and Business Name Search in South Carolina. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $25 and mail name reservation fee of $25. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by two methods, by mail and in person., which costs around $10. In addition, the DBA’s validity in South Carolina is five years, which you can file in South Carolina Secretary of State.

You can check out How to File a DBA in South Carolina for clearer understanding.

Step 2: Hire a Registered Agent

Hiring a Registered Agent is essential in starting a corporation. Registered Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are South Carolina Registered Agent Services to check in forming South Carolina Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in South Carolina are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In South Carolina, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your South Carolina corporation, the next step is to write and file a Articles of Incorporation. In writing, the South Carolina Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Registered Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your South Carolina corporation, you must prepare and file Articles of Incorporation with the South Carolina Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the South Carolina Secretary of State’s office, along with the required filing fee. Fees vary by state, but in South Carolina, the Articles of Incorporation filing fee costs around $110 for online and by mail filing. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
  • Offline filing: Send the form by mail to South Carolina Secretary of State’s Office, Attn: Corporate Fillings, 1205 Pendleton Street, Suite 525, Columbia, SC 29201

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in South Carolina, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing South Carolina corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your South Carolina corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in South Carolina are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • South Carolina Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required South Carolina licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your South Carolina corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in South Carolina for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your South Carolina corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in South Carolina can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or South Carolina Department of Revenue for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your South Carolina corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the South Carolina Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in South Carolina

Even if you have established your corporation in South Carolina, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in South Carolina has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in South Carolina are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in South Carolina

In forming a corporation in South Carolina, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in South Carolina, it costs $110 for online and by mail filing. The corporation in South Carolina also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What does it take to start a corporation in South Carolina?
To start a corporation in South Carolina, you need to file articles of incorporation with the South Carolina Secretary of State.
Are there any specific rules for South Carolina corporations?
Yes, South Carolina corporations must comply with the South Carolina Business Corporation Act.
Can I start a corporation without a lawyer?
Yes, you can start a corporation without a lawyer in South Carolina.
How much does it cost to start a corporation in South Carolina?
The filing fee to start a corporation in South Carolina is $135.
What are the minimum requirements to start a corporation in South Carolina?
To start a corporation in South Carolina, you need at least one director and one incorporator.
How long does it take to start a corporation in South Carolina?
It usually takes about 10 business days to start a corporation in South Carolina.
Do I need a business license to start a corporation in South Carolina?
It depends on your type of business, but most corporations will need a business license in South Carolina.
Can I start a non-profit corporation in South Carolina?
Yes, you can start a non-profit corporation in South Carolina by filing articles of incorporation with the South Carolina Secretary of State.
What’s the difference between a C corporation and an S corporation in South Carolina?
The main difference is that C corporations are taxed as separate entities, while S corporations are taxed as pass-through entities.
How much tax do South Carolina corporations have to pay?
The South Carolina corporate tax rate is 5%.
Can foreign entities start a corporation in South Carolina?
Yes, foreign entities can start a corporation in South Carolina by filing foreign qualifications with the South Carolina Secretary of State.
What liability protection does a corporation offer in South Carolina?
A corporation in South Carolina offers limited liability protection to its shareholders.
Do I need minutes of organizational meetings for my South Carolina corporation?
Yes, all South Carolina corporations must have minutes of organizational meetings.
How often do I need to file annual reports for my South Carolina corporation?
South Carolina corporations must file annual reports every year.
What information do I need to include in my articles of incorporation in South Carolina?
You’ll need to include your corporation’s name, registered agent information, and purpose in your articles of incorporation.
Can I register my trademark with my South Carolina corporation?
Yes, you can register your trademark with your South Carolina corporation.
Do I need to appoint officers for my South Carolina corporation?
Yes, all South Carolina corporations must appoint officers.
Can I amend my articles of incorporation after they’ve been filed in South Carolina?
Yes, you can amend your articles of incorporation after they’ve been filed in South Carolina.
What is the South Carolina Secretary of State’s mailing address?
The South Carolina Secretary of State’s mailing address is 1205 Pendleton Street, Suite 525, Columbia, SC 29201.
Is it necessary to register with the Department of Revenue to start a corporation in South Carolina?
Yes, you need to register with the South Carolina Department of Revenue to start a corporation.
Do all shareholders need to sign my articles of incorporation in South Carolina?
No, only the incorporator needs to sign your articles of incorporation in South Carolina.
Do I need to file a statement of information with my articles of incorporation in South Carolina?
No, you don’t need to file a statement of information with your articles of incorporation in South Carolina.
Can I use a registered agent service for my South Carolina corporation?
Yes, you can use a registered agent service for your South Carolina corporation.
What’s the difference between a closed corporation and an open corporation in South Carolina?
Closed corporations have limited shareholders, while open corporations can have unlimited shareholders.
Can a South Carolina corporation own property?
Yes, a South Carolina corporation can own property.
How many shares can I issue for my South Carolina corporation?
You can issue as many shares as you want for your South Carolina corporation.
Can an LLC convert to a corporation in South Carolina?
Yes, an LLC can convert to a corporation in South Carolina.
Can a corporation be related to other entities in South Carolina?
Yes, a corporation can be related to other entities in South Carolina, such as subsidiaries and affiliates.
Are there any tax incentives available for starting a corporation in South Carolina?
Yes, South Carolina offers tax incentives for certain businesses that locate or expand in the state.
What are the steps to start a corporation in South Carolina?
To start a corporation in South Carolina, you must file articles of incorporation, obtain necessary licenses and permits, and register with the Secretary of State.
What are the filing fees associated with starting a corporation in South Carolina?
The filing fee for articles of incorporation in South Carolina is $135.
What are the corporate tax rates in South Carolina?
The corporate tax rates in South Carolina are 5% for all corporations.
Do I need to have a registered agent to start a corporation in South Carolina?
Yes, all corporations must have a registered agent in South Carolina.
How do I choose a name for my corporation in South Carolina?
You must select a unique name that is available under South Carolina law and includes the words “corporation” or “incorporated.”
Can I reserve a name for my corporation in South Carolina?
Yes, you can reserve a name for your corporation in South Carolina for 120 days by filing a Name Reservation Request Form and paying a fee.
Can I use a PO Box as my South Carolina corporation’s registered office address?
No, a corporation’s registered office address must be a street address in South Carolina, except for corporations that conduct only online business.
How long does it take to incorporate in South Carolina?
Generally, it takes 5-7 business days to incorporate in South Carolina, but expedited options are available for an additional fee.
Can I complete the process of incorporating my South Carolina business online?
Yes, the South Carolina Secretary of State accepts online filings for incorporating a business.
Do I need to publish a notice of my corporation’s formation in a newspaper in South Carolina?
No, there is no requirement to publish a notice of your corporation’s formation in a newspaper in South Carolina.
Do I need to obtain a South Carolina State ID number for my corporation?
Yes, all corporations in South Carolina must register with the South Carolina Department of Revenue and obtain a State ID number.
Do I need to file a South Carolina annual report for my corporation?
Yes, all corporations in South Carolina must file an annual report with the South Carolina Secretary of State and pay the annual report fee.
What are the South Carolina minimum corporate filing requirements?
The minimum corporate filing requirements in South Carolina are filing the articles of incorporation, appointing a registered agent, and filing the annual report.
Can I register my corporation’s trade name in South Carolina?
Yes, corporations can register their trade name in South Carolina by filing a Doing Business As (DBA) certificate.
Does South Carolina require corporations to have bylaws?
No, South Carolina does not require corporations to have bylaws, but corporations generally use them to manage their internal affairs.
Can my South Carolina corporation have shareholders and directors who are not South Carolina residents?
Yes, a South Carolina corporation can have shareholders and directors who are not residents of the state.
Does South Carolina permit professionals to form professional corporations (PCs)?
Yes, South Carolina permits professionals to form professional corporations (PCs).
Can I serve as my corporation’s registered agent in South Carolina?
Yes, you can serve as your corporation’s registered agent in South Carolina, but you must have a South Carolina street address.
Does South Carolina have a franchise tax?
No, South Carolina does not have a franchise tax.
What is the annual report fee for a corporation in South Carolina?
The South Carolina annual report fee for a corporation is $25.
Can I form an LLC or a partnership in South Carolina?
Yes, you can form an LLC or a partnership in South Carolina.
Does South Carolina charge a sales tax?
Yes, South Carolina charges a sales tax.
Can I change my corporation’s registered agent in South Carolina?
Yes, you can change your corporation’s registered agent in South Carolina by filing a Statement of Change of Registered Office or Registered Agent Form and the appropriate fees.
What is the penalty for failing to file an annual report in South Carolina?
Failure to file an annual report can result in administrative dissolution by the Secretary of State.
What information is required on the articles of incorporation in South Carolina?
The articles of incorporation in South Carolina must include the corporation’s name, purpose, number of shares authorized, registered agent’s information, and incorporator’s information.
Can I file the articles of incorporation by mail in South Carolina?
Yes, you can file the articles of incorporation by mail in South Carolina.
What is the South Carolina Secretary of State’s website for incorporating a business?
The South Carolina Secretary of State’s website for incorporating a business is www.sos.sc.gov.
Does South Carolina require corporations to have officers?
No, South Carolina does not require corporations to have officers, but corporations generally have officers to manage their day-to-day operations.

Also Read

How to Save Money While Forming Your South Carolina Corporation

One of the first things to consider is the form of your business entity. In South Carolina, there are several options to choose from, including sole proprietorship, partnership, limited liability company (LLC), and corporation. While each type of entity has its own advantages and disadvantages, forming a corporation can provide you with important protections and benefits, such as limited liability for owners and tax advantages.

When forming a corporation, it is important to pay attention to the fees associated with filing the necessary paperwork with the South Carolina Secretary of State. While these fees can vary depending on the type of corporation you are forming, it is worth doing your research to find the most cost-effective option. Additionally, consider whether you need to hire a lawyer to help you with the formation process. While legal fees can add up quickly, there are also many resources available online that can help you navigate the process on your own.

Another important aspect to consider when forming a corporation is choosing a registered agent. A registered agent is responsible for receiving legal documents and important notices on behalf of your corporation. While you can choose to serve as your own registered agent, it may be more cost-effective to hire a professional registered agent service. These services typically charge a small fee, but they can help ensure that you do not miss any important deadlines or legal notices.

Additionally, it is important to consider the ongoing costs associated with maintaining a corporation in South Carolina. This can include filing annual reports, paying franchise taxes, and keeping thorough financial records. By staying organized and on top of these obligations, you can avoid costly penalties and fees in the future.

One final way to save money while forming your South Carolina corporation is to consider seeking out grants or loans that may be available to small businesses in the state. There are many resources and programs available to help new businesses get off the ground, so it is worth exploring all of your options before committing to any expensive investments.

Overall, forming a corporation in South Carolina can be a rewarding experience, but it is important to be mindful of the costs involved. By exploring your options, staying organized, and seeking out cost-saving strategies, you can save money while setting your business up for success.

Conclusion

Starting a corporation in South Carolina involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your South Carolina corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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