To start a corporation in South Carolina, here's everything you need to know.
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To form a corporation in South Carolina, you need to take the steps set forth below. To find out what's required to form a corporation in any other state, see Nolo's 50-State Guide to Forming a Corporation.
1. Choose a Corporate Name
Your corporation's name must be distinguishable from the names of other business entities already on file with the South Carolina Secretary of State. You can check a name for availability by using the South Carolina Secretary of State's business name database.
Your corporation's name must include one of the following words, an abbreviation thereof, or words with a similar meaning in another language: "Incorporated," "Corporation," "Company," or "Limited."
You may reserve a name for 120 days by filing an Application to Reserve Corporate Name with the South Carolina Secretary of State Corporations Division. The reservation must be filed by mail, and the filing fee is $10.
2. File Articles of Incorporation
Your corporation is legally created by filing Articles of Incorporation with the South Carolina Secretary of State. You can complete and file the articles online or you can file paper articles by mail. The articles must include:
- the corporate name and address
- the name, address, and signature of agent for service of process
- whether there is a single class or multiple classes of shares
- the number of shares, and
- the name, address, and signature of each incorporator (only one incorporator is required).
A CL-1 Form, Initial Annual Report of Corporations, must be filed at the same time as the articles. The filing fee for the articles is $110 and the fee for Form CL-1 is $25.
The articles must be signed by an attorney licensed to practice in South Carolina certifying that the articles comply with the state's legal requirements. The Secretary of State articles form contains a space for the attorney to sign.
3. Appoint a Registered Agent
Every South Carolina corporation must have an "agent for service of process," or "registered agent" in the state. This is an individual or corporation that agrees to accept legal papers on the corporation's behalf if it is sued. The agent can be a South Carolina resident or a business entity authorized to do business in South Carolina, but the registered agent must have a physical street address in South Carolina. Before you appoint the registered agent, make sure the agent agrees to accept service of process on your corporation's behalf.
4. Prepare Corporate Bylaws
Bylaws are an internal corporate document that sets out the basic ground rules for operating your corporation. They are not filed with the state.
Your corporation is not legally required to have corporate bylaws, but you should adopt them because they establish your corporation's operating rules, and help show banks, creditors, the IRS, and others that your corporation is legitimate. You can customize bylaws for your corporation on Nolo's website or use the bylaws in Incorporate Your Business, by Anthony Mancuso (Nolo).
Keep your bylaws, articles, stock certificates, minutes of shareholder and director meetings, and other important papers in a corporate records book. You can use a three-ring binder or order a corporate records kit through a corporate kit supplier (a corporate records book and company seal come with Nolo's corporate formation service).
5. Appoint Initial Directors and Hold Board Meeting
The incorporator—the person who signs the articles—must appoint the initial corporate directors who will serve on the board until the first annual meeting of shareholders (when the board members who will serve for the next term are elected by the shareholders). The incorporator must fill in an "Incorporator's Statement" showing the names and addresses of the initial directors.
The statement does not need to be filed with the state, but the incorporator should sign the statement and place a copy in the corporate records book. For a sample Incorporators Statement, see Incorporate Your Business, by Anthony Mancuso (Nolo). (An Incorporator's Statement also comes with Nolo's corporate formation service.)
At the first board meeting, the directors appoint corporate officers, adopt bylaws, select a corporate bank, set the corporation's tax year, authorize the issuance of shares of stock, and adopt an official stock certificate form and corporate seal. Sales of shares by small privately held corporations are usually exempt from federal and state securities laws—see Nolo's Corporations FAQ for more information.
Record the directors' actions in corporate minutes prepared by the incorporator or any of the directors. For corporate meeting minute forms, see Nolo's website or refer to Incorporate Your Business, by Anthony Mancuso (Nolo). ). (Nolo's corporate formation service comes with filled-out minutes of the first meeting of the board of directors.)
6. Comply With Other Tax and Regulatory Requirements
Additional tax and regulatory requirements apply to your corporation. These include:
EIN: Your corporation must obtain a federal employer identification number (EIN). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
S Corporation Filing: If the corporation wants to elect S corporation status for tax purposes, it must submit Form 2553 Election by a Small Business Corporation (signed by all the shareholders). The election should be filed within two months and 15 days after the beginning of the corporation's first tax year. See the IRS's S Corporations web page for details.
Business Licenses: There is no general statewide business license required in South Carolina. Depending on its type of business and where it is located, your corporation may need to obtain a local business license issued by a county, city, or other municipality. See South Carolina's web page on Licenses, Permits, and Registration for details.
7. Foreign Corporations Doing Business in South Carolina
All corporations organized outside of South Carolina must register with the South Carolina Secretary of State to do business in South Carolina. Foreign corporations must appoint a registered agent for service of process physically located in South Carolina.
To register, you must file an Application for a Certificate of Authority to Transact Business with the South Carolina Secretary of State and pay a $110 filing fee. A CL-1 Form must be filed with the application along with a $25 fee. The application may be filed online or by mail.
The completed application must be accompanied by a certificate of legal existence or good standing from the foreign corporation's home state that is not more than 30 days old.
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