South Carolina Startup
Forming a South Carolina startup business is an exciting time for any new entrepreneur;
it's one of the first tangible steps in making your business dream a reality. But
first, you must determine which type of startup business is best for your specific,
unique needs, goals, and priorities.
While DBAs are neither required nor allowed (other than as a fictitious name for
a South Carolina foreign corporation whose legal name is unavailable in the state),
there are many other business options to choose from. Let's go over a few of the
main entity types in detail below.
South Carolina Corporation
A business wishing to
incorporate in South Carolina to conduct for-profit purposes will, by default,
form a C corporation. A
C corporation has few ownership restrictions, allowing US citizens, non-citizens,
and other businesses alike to act as shareholders, but it pays more in federal taxes
than the other type of for-profit corporation.
An
S corporation avoids the "double-taxation" of a C corporation; rather than
being responsible for both a corporate tax and an individual tax, the profits are
"passed through" to the individual shareholders and taxed only at the individual
level. These shareholders must consist of no more than 100 individuals who are US
citizens or legal aliens (and not other business entities)s.
South Carolina Foreign Corporation
A South Carolina
foreign corporation registration is required for a corporation registered
in another state in order to do business in South Carolina.
South Carolina LLC
A limited liability company, or
LLC, is a type of legal entity that is not a corporation; it does not sell
shares to increase its corporate funds, and it does not have corporate officers.
Rather, members of a South Carolina LLC contribute funds and receive percentages
of ownership, but they do not necessarily need to correspond with each other in
the way that corporate shares and shareholder distributions must correspond.
To form a South Carolina LLC, you must file Articles of Organization with the Secretary
of State's office. This document is similar to the Articles of Incorporation, the
formation document for a corporation.
South Carolina Nonprofit Corporation
Forming a 501c3
nonprofit corporation is a matter of two distinct filings at two levels: first,
it must register at the state level as a South Carolina nonprofit corporation; then,
it must apply with the IRS to be treated as a tax-exempt 501c3 organization.
Note that 501c3 privileges are reserved for organizations registered for charitable,
scientific, educational, religious, literary, testing for public safety, amateur
sports competition, or animal or child cruelty prevention purposes. Other purposes
may be eligible for a different 501c status; more information may be found on the
IRS's website, irs.gov.