South Carolina is a fantastic place to do business, boasting one of the lowest corporate tax rates in the nation, plus the 5th lowest cost of labor in the US. The SC population is also growing rapidly, creating more opportunities for firms to thrive.
If you’d like to start a South Carolina business, this is the guide for you. Below, you’ll learn everything you need to know to understand how to start a business in South Carolina. Let’s get started!
Decide on a business idea
First and foremost, you’ll need to decide what kind of business you want to start. Chances are you already have something in mind, but if not, here are some things to consider:
- What are you talented or naturally skilled at? Could this talent make you well suited to a certain type of business?
- What business does your community need? Have you talked to people to find out?
- What are you interested in? Can you combine any of your passions with a business idea?
- Is this going to be a full time business, or more of a side hustle?
These are questions to ask yourself when deciding on a business idea. Once you have decided, move on to the next step.
Plan your South Carolina business
Now it’s time to start planning. This means coming up with a business plan, naming your business, researching locations, and more. There’s a lot to cover here, so let’s break it down:
Select a business name
First and foremost, you’ll need to decide what name you plan to use for your business. Since we’re still in the planning stages, you won’t actually need to register the name just yet – but you’ll want to think long and hard about what kind of name you want to use.
Ideally, a business name should have several aspects to it. It should be logical and make sense for the industry the business will be joining. It should be catchy and memorable for future clients or customers. And it should be unique – meaning not too similar to other already existing names.
This last bit is actually a hard-and-fast rule, rather than just a guideline. South Carolina requires that new business names must be unique from all established company names in the state.
To see if a name is available or not, you can search the business entity database online. Be sure to double-check any names that you are considering using, in order to confirm that they’re actually available.
In addition to finding a unique name, there are other important South Carolina business name rules to be aware of, including:
- Names for LLCs need to contain “limited liability company”, or select approved abbreviations such as “LLC” or “L.L.C.”
- Names for corporations need to contain “corporation”, “incorporated”, or select approved abbreviations such as “corp” or “inc”
- Other rules may apply – see the full LLC naming rules here and corporation naming rules here
When you find the right name for you, and confirm that it’s available, you can move on. Or, if you want to buy some time, you can reserve a business name for 120 days by paying a $10 filing fee and filing the reservation form.
South Carolina trade names
South Carolina does allow businesses to use “trade names”, otherwise known as DBAs or fictitious names. These are secondary business names that can legally be used in the course of your business. Once your business entity is formed, you can register additional trade names to provide your company with more options when it comes to branding and marketing.
Register a domain name
Once you choose a name, you should immediately register a domain name for your new business. In most cases, getting a .com domain name is ideal, but there are many other extensions (.biz, .net, etc.) that are worth considering.
You can use a tool like Namechk to search for an available domain name and find a great deal on the registration cost. You may find that your desired names are taken, so you may need to get creative.
Complete market research
Once you have an idea, you’ll want to do some market research. You want to gain a better understanding of who your customers – and competitors – are. You can achieve this by conducting online research, running focus groups, sending out surveys, and more. There are also companies that can help you complete market research, for a fee.
Select a business location
Unless you plan to run a remote/virtual business, you will need to find a physical location for your company. Research commercial property in your area, and take note of typical costs. For customer-facing businesses (retail and some services), location is very important, so take your time in selecting the right area for your business.
Create a business plan
You will now need to create a detailed business plan for your new venture. This plan is helpful for your own purposes, and will also be necessary in order to obtain funding from a bank. A good business plan should contain these elements:
- Finances: How much funding does the business need to get started? How many sales does it need each month to break even on expenses?
- Product: What do you plan to sell? Is it a product or a service? What problem does your business solve, and how is it distinct from your competitors?
- Marketing: How will you drive sales? What marketing and sales efforts do you plan to employ? How much money will you set aside to fund marketing efforts?
- Staff & partnerships: How many people will you need to hire, and what skill sets do they need to have? Will you have any partnerships or arrangements with other local businesses?
If you need help, you can find business plan templates online that will help walk you through the steps you need to take to draft a detailed business plan. If you plan to seek funding, you may also wish to call your bank to see what they require in terms of business plans.
Decide on a business structure
Before you form your business as a legal entity, you will need to decide which business structure you will use. There are a few different types of businesses, each with its own pros and cons.
Sole props are single-person operations. Examples include freelancers, gig economy workers, and consultants. A sole proprietorship business is very easy and inexpensive to form, and tax reporting is also fairly simple. As a sole proprietor, your business taxes are reported as part of your personal tax return.
The downsides to a sole prop are that you cannot hire employees, and you don’t have the legal liability shield that something like an LLC or corporation would provide. 100% of the debts and liability of a sole proprietorship go to the sole owner: you.
A general partnership is an unincorporated business structure similar to a sole proprietorship, except with two active owners/participants. Partnerships do not have liability protection.
Limited liability company (LLC)
A limited liability company, or LLC, is a popular choice for business owners because it provides liability protection to the owners. It separates the business from the owners, which means the personal assets of owners will not be at risk if the company gets sued or goes into bankruptcy.
LLCs are also a bit easier to form than corporations. Even so, there is definitely more work involved with an LLC than there is with a sole proprietorship.
A corporation is owned by its shareholders and is a separate entity. There are a few different types of corporations (C-corp, S-corp, etc), with the main differences being the way they are treated tax-wise.
Corporations are more regulated than LLCs, which makes them more attractive to outside investors. For this reason, most large companies are corporations. The downside is that it takes more effort, and more paperwork, to form a corporation.
A nonprofit is a legal entity that is set up with charitable status, meaning that its goal is not to make a profit, but rather to address a certain cause. Nonprofits are funded by donations, rather than investors, and are subject to many regulations. They are exempt from most forms of taxation, although tax returns must still be filed.
Register your business in South Carolina
Now it’s time to actually form the new business entity for your company. During this process, you’ll need to file paperwork with the South Carolina Secretary of State’s office, through the Business Entities Online portal (you can also file by mail).
Alternatively, you can opt to use a business formation service. This is optional, and you’ll need to pay a bit extra. However, these services can typically save you a lot of time and hassle, so many entrepreneurs find that they are well worth the cost.
If you opt not to use a service, the basic steps for doing the work on your own typically include:
- Naming your company
- Choosing a statutory agent (this individual/company is responsible for receiving legal documents on behalf of the business)
- Filing paperwork with the state
- Obtaining business licenses and permits if necessary
- Applying for an EIN from the IRS
There are slightly different steps needed for each of the different business entity types – more on this below.
Form a South Carolina sole proprietorship
Follow these steps:
- Decide if you will operate under your legal name, or use a trade name
- If you use a name other than your own, you may need to register a trade name/assumed name
- Apply for a business license and/or other necessary permits from local governments (city/county), as needed
- Sole Proprietorships do not generally need to register with the Secretary of State
Form a South Carolina LLC
Follow these steps:
- Name your new LLC (see notes above)
- Choose a South Carolina Registered Agent (or use a service such as Northwest Registered Agent). This SC Registered Agent will be in charge of receiving legal documents, notice of lawsuits, and more on behalf of your company
- File the LLC Articles of Organization online or by mail, and pay the $110 filing fee
- Draft an LLC operating agreement
- Apply for an EIN with the IRS
Form a South Carolina corporation
Follow these steps:
- Decide on your desired corporate tax structure (S corp or C corp)
- Name your new corporation
- Choose a Registered Agent for your business (or use a service)
- Hold an organizational meeting and appoint directors
- File the South Carolina Articles of Incorporation online or by mail, and file the Initial Report. Submit these along with the $110 filing fee and $25 Initial Report fee
- Apply for an EIN from the IRS
Apply for business licenses and permits
Registering your business and forming an LLC or corporation is an important part of starting your business – but in order to operate legally, you will likely also need to obtain certain permits and/or business licenses.
The specifics vary depending on the type of business you are running, as well as your location. For example, restaurants will need health permits, bars will need liquor licenses, and medical service providers will need various professional licenses and federal permits. You will need to research the specifics that relate to your business type.
There are different requirements at each level of government:
- Local: Cities and counties may require certain business licenses or permits. Contact your county clerk for details.
- State: South Carolina may require additional permits and/or licenses in order to operate legally in the state. Check the South Carolina Licenses, Permits and Registration page for more information.
- Federal: Federal permits/licenses may be required for certain regulated industries, such as construction, medicine and legal services. Check the Small Business Administration (SBA) guide for more details.
At this time, you should also apply for an Employer Identification Number (EIN). An EIN is a federal tax ID that is required to hire employees. You can apply for an EIN online with the IRS – the application is free and quick.
For most businesses, some startup funding will be necessary in order to get started. In step #2, you should have calculated your funding needs while drafting a business plan. Use this information to determine how much funding you need to raise.
For bootstrapped companies, you may be able to get by with your own personal savings, or some seed investments from friends and family. If your funding needs are small, this is likely your best route.
If your business plan indicates that substantial funding is needed, you will likely need to apply for a loan and/or a grant.
- Small business loans are offered by banks, credit unions and other lenders. They can range from as little as a few thousand to hundreds of thousands. Specifics will depend on your business, as well as your personal creditworthiness. Most small business loans are issued in a lump sum, and paid back on a monthly basis, with interest.
- Small business grants are offered by government agencies and some nonprofits. They are essentially business loans that don’t need to be paid back – but they usually have substantial fine print. It’s worth looking into, however, as there may be grants available, particularly for businesses serving an important social need, or for underprivileged entrepreneurs starting their first business.
Set up your business finances
Beyond securing funding, there are other routine tasks that you need to take care of to get your business’ finances in order. This includes:
- Opening a business checking account. You should have a separate business bank account that you use solely for business purposes. You can open this account at most banks, credit unions and financial institutions. Call ahead to see what documents will be required to open this account.
- Open a business credit card or line of credit. This is not strictly necessary, but most businesses can benefit from having a business credit card, and/or a business line of credit. This can be used for day-to-day expenses and purchases, and may also earn you some rewards.
- Set up your accounting system. As a business owner, you will need to keep very detailed records about all revenue and expenses. To do this, you’ll want to set up the proper foundation from day one. This could be investing in an account software such as QuickBooks or Xero, hiring a bookkeeper, or at the very least establishing a spreadsheet to track everything. If you do not have any accounting experience, it’s wise to hire a professional to help.
- Purchase business insurance. Most businesses should have some form of liability insurance, and potentially other forms of business insurance as well. Insurance policies can help protect your equipment and buildings from costly damage, and help shield your company from liability if a worker or customer is injured or otherwise harmed. Speak with a local business insurance provider to get started.
Create a business website
In this day and age, having a solid web presence for your business is very important. And social media profiles, while important, are no replacement for an actual website. You will want to build a professional business website that you can use to drum up business, inform your customers, and stay connected with your clientele.
The simplest way to build a website is to use a website builder from a web hosting provider. When you register a new domain name, look for a provider that also offers web hosting and a site builder, so that you can purchase everything at once and get your site set up quickly.
Unless you plan to operate a solo business (with you as the only worker), you will likely need to hire employees. To do this, you will need a federal employer identification number (EIN), which is a free tax ID number issued by the Internal Revenue Service (IRS).
Be sure to keep up with state-level requirements for employers, as well. For instance, each time you hire an employee, you are required to report the new hire within 20 days of the employee’s first day of work. And you’ll also need to register for South Carolina employer taxes, including withholding tax and unemployment insurance tax.
At this point, businesses also should look into setting up their payroll system – whether you handle it yourself, or use a payroll service.
Run and grow your business
Now it’s time to get down to business and engage with the day-to-day activities that are sure to bring your business success. This means marketing your products and services, maintaining good relationships with your return customers, and setting yourself apart from the competition.
South Carolina business FAQs
Still have questions about running a business in South Carolina? Here are some answers to frequently asked questions.
What are some business resources in South Carolina?
SC entrepreneurs will enjoy access to a variety of helpful business resources, small business incubators, consultancies, and more. Perhaps the best place to start is the South Carolina Small Business Development Center (SBDC). The South Carolina SBDC offers free business consultation, free coaching, and tons of other useful resources. SCORE is another great resource, with branches in Charleston, Greenville, Myrtle Beach, and more.
What is the minimum wage in South Carolina?
The South Carolina minimum wage is $7.25, as the state uses the federal minimum wage set out as part of the Fair Labor Standards Act. There is an exception for employees who earn tips, who can be paid less so long as their wages + tips equal at least the $7.25/hr minimum wage.
Keep in mind that it is possible for individual cities or counties to impose their own minimum wage laws that may exceed South Carolina’s minimum wage. Check with local government officials in your area to ensure your business is compliant with all local rules.
What business taxes does South Carolina have?
There are several business taxes in South Carolina that firms will need to pay attention to. There is the SC sales tax, which is currently 6% on the state level (+1% on the local level in many jurisdictions). If you sell taxable goods or services, you will need to collect this sales tax and submit regular reports.
Most firms will be subject to corporate income tax, which is 5% for most businesses. Then there are South Carolina employer taxes, including withholding tax and unemployment insurance tax. And a variety of other taxes may apply, depending on your industry and business activities. Check with the South Carolina Department of Revenue for details.
How do I dissolve an LLC or Corporation in South Carolina?
To shut down a South Carolina company, there are several steps to take. The owners will need to file voluntary dissolution paperwork with the state. Tax returns will need to be filed, and tax accounts closed out. Final paychecks should be sent to employers, and company debts should be settled. Learn more here.
The process of closing a South Carolina business can be complex; it’s recommended to work with a CPA or attorney.
CHK_ YOUR NAME RIGHT NOW
Use our engine to quickly check your content right now!