How to start a South Carolina corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your South Carolina corporation.

How to start a corporation in South Carolina

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your South Carolina corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following South Carolina requirements:

• Your name must include "Corporation," "Incorporated," "Company," "Limited," or an abbreviation of one of these terms. You may also use words or abbreviations with the same meaning in another language.
• Do not use a deceptive name that implies a business purpose other than those permitted by law or in your Articles. For example, don't name your business "Mobile Communications, Inc." if you've incorporated as a landscaping company.
• Make sure your name is not the same as, or too similar to, a business name already registered or reserved with the South Carolina Secretary of State.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a South Carolina S-Corp and C-Corp tax designation

There are similarities between a South Carolina S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership Rules: C-Corps have no limits on the number of shareholders or stock classes they may have. S-Corps are limited to no more than 100 shareholders and one stock class. Only U.S. citizens or legal residents may own shares in an S-Corp.
• Taxes: A C-Corp is taxed as its own entity. It pays taxes at the corporate level. Individual shareholders may also pay taxes on any dividends they receive. An S-Corp is not taxed as a separate entity. It has a "pass-through" tax structure. It distributes income to its owners, who pay taxes on their individual returns.
• Documents: When you file as a corporation, your business is automatically a C-Corp. To become an S-Corp, you must file IRS Form 2553, Election by a Small Business Corporation, to elect this status.

3. Appoint directors and shareholders for your South Carolina corporation

Each state has its own personnel requirements for incorporating. In South Carolina, corporations need one or more directors. South Carolina does not require that directors live in the state.

State the number of directors of your corporation in your Bylaws. You don't have to list your directors in your Articles of Incorporation, but you can if you choose to.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a South Carolina address) or choose one to do that service for you (if you are not located in South Carolina or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of South Carolina

Once you have a business name and registered agent, you can register your business as a South Carolina corporation with the state by filing your Articles of Incorporation. This document may be referred to informally as a corporation's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

South Carolina requires that you file two additional documents along with your Articles of Incorporation:

• A certificate stating that your Articles meet all necessary requirements of the section of the state statute regarding Articles of Incorporation. This certificate must be signed by an attorney licensed to practice in South Carolina.
• Your initial annual report and license fee.

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in South Carolina must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your South Carolina corporation.

What to do after incorporating in South Carolina

In South Carolina, you must also create and maintain additional documents to preserve your corporate status. These are the two most important ones:

• Bylaws: A corporation's Bylaws formalize its management, structure, and operating procedures. The Bylaws must be consistent with your Articles of Incorporation and the law.
• Meeting Minutes: Every corporation must record actions and decisions that occur during directors' and shareholders' meetings. These records are called Minutes. You must keep them for 10 years at your corporate headquarters.

Neither document must be filed with the state in South Carolina, but requirements for Bylaws and Meeting Minutes vary by state. Keep your documents with your other corporate records at your principal office.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in South Carolina means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in South Carolina, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, you must keep records like bylaws and meeting notes to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state