Starting a Business in South Carolina: 8 Essential Steps

Have you ever dreamed of being your own boss but need help figuring out how to get there? We have entrepreneurs looking to start a small business in South Carolina covered. From selecting a business name to filing taxes to applying for business permits and everything in between, we can help. There are eight essential steps to take your business from idea to incorporation and make you a South Carolina business owner.

Start Operating in South Carolina: Key Points

• State law requires all South Carolina business entities to have a registered agent.

• Business owners need to contact their relevant specific municipalities to get their license(s).

• There are four main business structures (and one tax classification) to choose from.

Ready to Start a South Carolina Business?

With the correct information, setting up a business in South Carolina doesn’t have to be overwhelming. New and experienced business owners can start operating in South Carolina after completing eight essential steps.

Contrary to popular belief, the process doesn’t have to be complicated or out of reach. Even for entirely new small business owners, anyone ready to take their business to incorporation can do so after breaking it down into manageable steps. A third-party service can also help business formation go more smoothly from start to finish. With the right idea and plan, you can get to incorporation.

1. Choose a Business Idea

If you don’t already have a business idea, this is an integral first step. Starting a new business doesn’t need to be groundbreaking or innovative. You must offer a service or product that solves a need and can be marketed to a specific customer demographic. Entrepreneurs looking to start a business in South Carolina – or anywhere – need to have some vision that sets the foundation.

There are plenty of ways to find inspiration if you don’t already have an idea:

• Consider problems around you that need solving to start thinking about products and services.

• Keep up with trends to help you anticipate a problem that might need solving.

• Build off an idea that’s already working. Not every idea needs to be new. Think of a great product or service and think of ways you could improve it.

• Get people together who have similar interests as you for a brainstorming session.

• Keep up your mental and physical health to eliminate brain fatigue or sluggishness that could block creativity.

You could also turn your existing skills into a business, which is especially popular for recent college graduates. Monetizing something you’re passionate about or a hobby is a common way many entrepreneurs have started. For example, people who care about the environment could start an eco-friendly business, or people with social media skills could create a niche marketing agency.

2. Draft a South Carolina Business Plan

Before going through the business formation process, develop a solid business plan. It’s essential to put a plan in place because it outlines each stage, going through the details of what it takes to start managing your entity and operating in South Carolina. It can also help bring in investors or potential business partners because it shows you’ve thought every step through carefully.[1]

What makes a successful business plan? The most important thing to ensure is that your plan meets your business needs. Think of what you want to accomplish and consider your plan as the foundation that outlines how you can get there. Entrepreneurs can pick whatever format works best for them: This typically falls between a detailed, traditional plan or a high-level, lean startup plan.[1]

There’s no one-size-fits-all template. However, making the road map for your new business does require some essential critical pieces of information. This document gets entrepreneurs to think about how they would want to structure, run, and eventually grow their businesses. Without one, owners may risk having a failed business venture via lack of planning, investment, or partnership.

3. Select a Business Name

What makes a good business name? If you’re starting a business in South Carolina, you need a name that fits your product, is easy for customers to remember, and is true to your brand. Not only do you want a name that sticks, but you must also ensure it follows state and federal laws.

For example, you must ensure your business name isn’t already being used. You could get into legal trouble for doing business under the same name as another entity. Avoid breaking any laws by doing a South Carolina business search through the state website or by using Swyft Filings’ Free Business Name Search tool to make sure that it’s available to use in the state.

If you have a promising business idea and name, but aren’t ready to move forward yet, consider filing a name reservation with a $25 filing fee. Business owners prepared to progress must register their name with the county clerk where the entity is located. Corporations also need to register with the Secretary of State.[2] Changing your name also requires additional filing work.

4. Choose a Business Structure

Entrepreneurs can consider four major types of business structures for their business formation. Each one has its pros and cons when it comes to management style, profitability, tax treatment, and more. If you want to save time, money, and energy when forming your entity, consider using a third-party service. Swyft Filings can help with five different business types to ensure everything is filed correctly.

The four main business structures are:

1. Limited Liability Company (LLC)

2. C Corporation

3. Doing Business As (DBA)

4. NonprofiBusiness owners can also consider filing for an S corporation, which you should be careful to note is a type of tax classification, like a legal structure, not a business structure.

Here are ways to differentiate the four business structures and the one tax status. This way, you know what you’re getting into when you take your local business closer to incorporation.[3]

5. File Business Formation Documents

It’s important to know which documents you need to file to proceed with business formation. Some state laws require specific forms, while others don’t. Without filing properly, the Internal Revenue Service (IRS) or Secretary of State may reject your request for incorporation. Other risks come with failing to document your entity’s governance and internal operations.

Depending on which business structure or tax classification you choose, owners must file different formation documents. Most business entities in South Carolina need to file their articles of incorporation for $110 to proceed with their business formation.[4] On top of this, business corporations also need a CL-1 form and a $25 filing fee to register with the Secretary of State.[5]

Your articles of incorporation should include several crucial details, such as:

• The name of the business 

• The name, address, and signature of the incorporator/s or organizer/s

• The name and address of your South Carolina registered agent[5]

Every business that files with the Secretary of State’s office needs to have a registered agent to accept Service of Process.[6] Swyft Filings’ registered agent service can help you find a professional South Carolina agent. Business owners also need an attorney licensed to practice law in South Carolina to sign their articles of incorporation for a business corporation.[5]

Owners should also consider drafting an operating agreement. Even though it’s not required by state law, it acts as a valid legal document to help establish who owns the company. It’s the only governing document for the business. It helps define who has decision-making powers, like who should be involved in financial and functional decisions or make rules and provisions.

When drafting your operating agreement, you could include the following:

• Names of business members

• Percentage of members’ ownership, as well as voting rights

• Distribution of profits and losses, in addition to buyout and sell-out rules

• A brief explanation of members’ responsibilities and management styles

• A description of the business structure[7]

Operating agreements are beneficial for LLCs. If you choose this as your business structure, an Operating Agreement protects members from personal liabilities. Without one, your LLC could resemble a sole proprietorship or partnership, which puts you at risk as an owning member. They also help differentiate state-generic rules for governing bodies.[7]

It’s vital to get the paperwork right. These documents act as the foundation for your entity, and some are legally required. To ensure your filing is done correctly and efficiently per state and federal laws, consider using a third-party service or business resource like Swyft Filings. We handle the paperwork so you can focus on running your business.

6. Apply for South Carolina Business Licenses and Permits

Unlike other states, there is no single statewide South Carolina business license. Instead, each municipality – meaning every city, county, and town – has business licenses, permits, and registrations. The state has an online small business development center called the South Carolina Business One Stop (SCBOS) to help owners find the contact info for their local city or county.[8]

You cannot apply for the necessary credentials on SCBOS but rather use it as a resource to look up each municipality’s contact information. [8] For more information on different cities, counties, and towns, you can head to the County & City information page or the South Carolina Association of Counties website. For a complete list of counties and contacts, click here.

Also, note that businesses need a local business license in the municipalities where business is conducted and where it is physically located. For example, suppose your business is physically located in one city but does business in another. In that case, you must get business licenses for both cities to start operating in South Carolina. Home-based and online businesses usually also need licenses.[8]

Operating without a license can put you at risk of doing business illegally. Business owners also need to register with the Secretary of State, on top of checking what licenses, permits, and registrations they need to complete for each of their business’ municipalities and the respective costs.[8] To help lessen the administrative work, try Swyft Filings’ Business Licenses and Research service for support.

7. File and Report Business Taxes

From Charleston to Myrtle Beach and every city in between, every business owner in South Carolina is legally required to file and report business taxes. The South Carolina Department of Revenue has an online portal where owners can take several actions, such as filing and paying state taxes, applying for a business tax account, uploading W2s, and more. They can also access information and resources.[9]

According to the Department of Revenue, filing electronically is the fastest and easiest way to file your business taxes and complete your return. Its automatic calculations help reduce the chance of errors, you can save your application at checkpoints throughout the process, and it gets to the Department of Revenue sooner, meaning they can start processing it sooner to meet deadlines.[10]

There are eight different tax categories, each with their own electronic file and pay options:

1. Corporate

   1. Note that the Corporate Income Tax rate on C corporations is 5% on South Carolina taxable income.[11]

2. Fiduciary

3. Miscellaneous

4. Motor fuel

5. Partnership

6. Property

7. Sales, Use, and Accommodations

8. Withholding[10]

The Department of Revenue has an online platform called MyDORWAY, where business owners can pay online using a credit card, track their refund, request a payment plan, complete a business tax application, and more.[12] To find a specific form – maybe for franchise, annual, state, or sales taxes – check the online registry to search by form name, form category, or tax year.

This post-formation period of the business journey is critical because paying taxes is a legal obligation on both the state and federal levels. The Department of Revenue offers free seminars and workshops to help educate taxpayers.[13] Failing to pay taxes – and on time according to every deadline – can result in your business being terminated or falling into legal trouble with the IRS. 

The IRS also offers more information on what taxes business owners are obligated to pay, how they can pay them, and what’s needed for each type of business. In general, there are five types of business taxes on the federal level:

1. Income tax - all companies (except partnerships) must file this

2. Estimated taxes

3. Self-employment tax - for individuals who work for themselves

4. Employment taxes - for companies that hire employees

5. Excise tax - taxes on goods or services at the time they’re purchased[14]

8. Open a Business Bank Account

Unfortunately, almost half of all small businesses in the United States use personal credit cards to make business-related purchases.[15]

Having a credit card solely for business spending is helpful for multiple reasons, such as:

• It helps separate personal spending from professional

• It helps build credit, which allows companies to expand

• It can help individual business owners develop their credit

To get a business bank account, business owners need an Employer Identification Number (EIN). We can help you get one here. This is similar to your social security number (SSN), which the IRS uses to identify you or your business when you file taxes annually. On top of allowing owners to get a business credit card, they can also open a business account and apply for licenses.

However, there are a few other vital things to know about business credit cards. While they’re easy and convenient, they still come with a line of credit unique to the business and its owner and a set limit – like all credit cards. Suppose the balance is not repaid in full each business cycle. In that case, lenders can hit borrowers with an interest charge, which is usually much higher than the rate on a small business loan.[16]

Take Your First Steps Toward Small Business Ownership

Ready to take your business from idea to incorporation? We’re here to help your business formation go easier and ensure you get started on the right foot. Not only do we make sure your business follows the law, but our service can also be tailored to fit your business needs.

The business formation process starts with a strong idea and business plan, which is typically a traditional plan or lean startup. From there, owners need to register their unique name, or they can reserve one. Then, choose from four business structures: (LLC), C Corporation, DBA, and nonprofit. You can also elect a tax classification, S corporation status.

Each state and business structure has requirements, so check which formation documents, business licenses, and permits you need. Otherwise, you might risk operating illegally. Once you start operating in South Carolina, follow through with filing your business taxes and consider opening a business bank account so you can build credit and potentially expand.

Frequently Asked Questions

Is South Carolina a good place to start a business?

Yes. State law requires all businesses to have a registered agent in South Carolina, who helps with legal paperwork and receives due process. The South Carolina Business One Stop also acts as a comprehensive online guide and business hub to help entrepreneurs in their business journeys.

How much does it cost to start operating in South Carolina?

It depends on you and your business needs. For example, every business needs to apply for a license to operate in the municipalities where they operate and are physically located. This could mean filing multiple applications and paying various fees for the same purpose. Also, depending on what business structure (or tax classification) you choose, you will need to pay different fees.

Can I start a business in South Carolina without a business plan?

Even though state or federal law doesn’t require a business plan as an official document to start running a business, we highly recommend that you draft one before starting. It acts as a road map to walk you through the steps and think of how you want to structure, run, and eventually grow your business. They also help business owners attract funding and other business partners.

What does South Carolina require to start a business?

State law requires business owners to have and register a unique name that isn’t already being used, file the necessary business formation documents (which usually include articles of incorporation), get the required business licenses for the relevant municipalities, and have a registered agent located in the state to receive due process.

What is the process for starting a business in South Carolina?

There are several steps to go from idea to incorporation but to get started, business owners need to:

• Have a solid and lucrative idea.

• Draft a business plan with specifics.

• Choose and register a unique name.

• Choose from one of four business structures (or one tax classification).

• File the required business formation documents.

• Get a registered agent located in the state.

• Apply for license(s).

Why are most LLCs in Delaware?

Many businesses choose to incorporate in Delaware for several reasons. According to the state’s Division of Incorporations, “Delaware General Corporation Law is the most advanced and flexible business formation statute in the nation.” Offering a complete package of incorporation services, it’s no wonder why more than two-thirds of the Fortune 500 companies are registered in Delaware.[17]

Bibliography

1. U.S. Small Business Administration. “Write Your Business Plan.” Accessed July 26, 2023.

2. U.S. Small Business Administration. “Doing Business in the South Carolina District.” Accessed July 26, 2023.

3. Swyft Filings. “Choose The Right Business Type.” Accessed July 26, 2023.

4. South Carolina Secretary of State: Business Entities Online. “Downloadable Paper Forms.” Accessed July 27, 2023.

5. South Carolina Secretary of State. “FAQs About Business Entities.” Accessed July 27, 2023.

6. South Carolina Secretary of State. “Service of Process.” Accessed July 27, 2023.

7. U.S. Small Business Administration. “Basic Information About Operating Agreements.” Accessed July 27, 2023.

8. South Carolina Business One Stop. “Business License.” Accessed July 30, 2023.

9. South Carolina Department of Revenue. “Tax.” Accessed July 30, 2023.

10. South Carolina Department of Revenue. “File & Pay Business Taxes.” Accessed July 30, 2023.

11. South Carolina Department of Revenue. “C Corporation.” Accessed July 30, 2023.

12. South Carolina Department of Revenue. “MyDORWAY.” Accessed July 30, 2023.

13. South Carolina Department of Revenue. “Taxpayer Education.” Accessed July 30, 2023.

14. IRS. “Business Taxes.” Accessed July 30, 2023.

15. Small Business Administration. “10 Stats That Explain Why Business Credit is Important for Small Business.” Accessed July 30, 2023.

16. Investopedia. “Using a Business Credit Card.” Accessed July 30, 2023.

17. Delaware Division of Corporations. “About the Division of Corporations.” Accessed Aug 1, 2023.