Should you form your corporation in South Carolina? We've collected the relevant information that will help you make this decision.
Pros
Tax rate of 5%
Low cost of living
Low cost of doing business
Cons
High tax rate for restaurant food and alcohol
Cost of doing business
$235 filing fee / $25 annual statement
Privacy
No disclosure of owners
Forming your corporation in South Carolina
The name
In order to communicate to the public that your new business is incorporated, its official name will need to end with one of the following signifiers (or a relevant abbreviation or foreign language version of): “incorporated”, “Company”, “Limited” or “corporation.” In addition, it is required that the name of your business is not intentionally misleading to consumers, for any reason. Your company’s new name must also be completely unique, and not deceptively similar to any other organizations name or trademarks. Do a FREE name search now.
Board of directors requirements
You will need to form an official board of directors when incorporating in South Carolina. Here are the states explicit regulations regarding these directors:
Required number of directors
South Carolina corporations must have at least one director listed in their incorporation documents.
Age restrictions
Directors of corporations located in South Carolina can be of any age.
Residence restrictions
There are no residence restrictions imposed on the directors of C corporations in South Carolina. However, S corporations are only allowed to have directors located in the United States.
What information needs to be included in the Articles of Incorporation?
South Carolina does not require the names or addresses of directors to be disclosed in incorporation documents.
Requirements for the Articles of Incorporation
The Articles of Incorporation is a document that must be filed during the incorporation process in every state. Here is the information that must be included in this document when filing in South Carolina:
Stock information
South Carolina requires the number of initial shares outstanding, and their par value, to be disclosed during the incorporation process. The number of outstanding shares does not affect initial state filing fees.
Officer information
The state of South Carolina does not require officer information to be disclosed during the filing process.
Registered agent information
All South Carolina corporations must have a registered agent on file, and submit their name and address (which cannot be a PO box). This agent will be required to be accessible during standard business hours, and act as the state’s point of contact with the company.
Additional South Carolina filing requirements
Many states have steps in the incorporation process that are unique to that state. These can also vary at the municipality or county level as well. Here are the steps required throughout all of South Carolina:
Initial report deadlines
All corporations in South Carolina must file an initial report at the same time of incorporating.
If your business is a professional practice
Professional service corporations are permitted to form under the professional corporation (PC) structure.
Corporate record keeping requirements
Corporations are required to keep formal documentation regarding several of their operations. These are the explicit record keeping formalities required by South Carolina:
A copy of the Articles of Incorporation, bylaws, and their amendments
Alphabetical, in-depth records that detail the owners (along with their names and addresses) and class of all outstanding stock shares
The business address and names of all officers and directors
Formal, in-depth documentation of all stock related resolutions
A permanent collection of meeting minutes for all shareholder, director, and committee meetings.
A copy of all written communications with shareholders within the previous three years
A copy of the corporation’s most recent annual report
Copies of the company’s last ten federal and state tax returns
Formal documentation of all director, shareholder, and committee decisions, regardless of if they were made during a meeting or not.
South Carolina corporate taxation and fee requirements
There are several tax and fee requirements that must be addressed by corporations in South Carolina. They are as follows:
Taxation
All states have complex taxation requirements. For more information regarding taxes in South Carolina, it is advised that you visit the state’s official business related website.
Annual report requirements
Corporations in South Carolina are required to file an annual report within 3 ½ months following the close of its fiscal year. The fee associated with this process is determined by the level of working capital the company has employed but carries a $25 minimum. Learn more about annual reports.
Tax identification numbers
South Carolina requires an EIN (employee identification number) for all corporations that will have employees, and most banks will require one to open accounts. South Carolina does not require corporations to obtain state tax ID numbers. Learn more about EINs.
Business license requirements
The business licenses and permits required in South Carolina vary wildly depending on the county or municipality in which your new corporation is located. If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
S corporation election
South Carolina does not require a state-level S corp election, as they recognize any elections held at the federal level.
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