Here’s an overview of the key steps you’ll need to take to start your own business in South Carolina.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check Choose Your Business Structure on Nolo’s website for more information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the South Carolina Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 120 days by filing an Application to Reserve Name form with the South Carolina SOS. There are different forms for LLCs and corporations. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in South Carolina and How to Form a Corporation in South Carolina for more information.
Sole proprietorships and partnerships in South Carolina have the option to register an assumed name with the South Carolina SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be engaged in retail sales in South Carolina, you must apply for a retail license. If you will have employees in South Carolina, you must register for employer withholding tax. Both registrations are handled by the South Carolina Department of Revenue (DOR). You can accomplish both types of registrations (among others) by using the state’s MyDORWAY website.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
You can find information about which licenses you may need and which agencies issue them by going to theLicenses, Permits, & Registration section of the sc.gov website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. Professional licensing is handled through the South Carolina Department of Labor, Licensing and Regulation (LLR). More specifically, the licensing is handled by the LLR’s Division of Professional and Occupational Licensing (POL), which, in turn, contains, among other offices, the Office of Board Services (OBS). OBS oversees all of the POL professional and occupational regulatory boards.
You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
South Carolina taxes every kind of business. See South Carolina State Business Income Tax for more information on state business taxes in South Carolina.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (SC1040).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, South Carolina partnerships also must file Form SC1065 , Partnership Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. Unlike most other states, South Carolina LLCs are not required to file an annual report. See South Carolina LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to South Carolina corporation taxes including a license fee. An annual report must be included as part of the corporation’s tax return.
If you have employees, you must also deal with state employer taxes.
And, apart from South Carolina taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.
Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check Obtaining Business Insurance for more information.