A South Carolina professional corporation (PC) is a business formed by one or more licensed professionals to offer services related to their profession. The business is taxed as a single corporate entity and, in most cases, it shoulders the burden of liability instead of the individual owners (shareholders). We’ll cover the structure in more detail as we answer questions like “What is a professional corporation in South Carolina?” and “How do I form one?”
Is the PC structure right for you?
All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you. If you want to know how to start a PC in South Carolina, you should check to see if your profession qualifies. The list below provides some examples.
- Private investigators
- Mental health practitioners
Your South Carolina PC will need a board of directors authorized by the Secretary of State. The directors govern the PC for the shareholders. Depending on the nature of the business, you should check if the licensing authority for your profession restricts the issuance of shares.
An alternative business model is a limited liability company (LLC). This entity offers more flexibility for its members (owners), who must shoulder their own professional liability claims just like in a PC.
Choose a name for your South Carolina PC
South Carolina has strict requirements regarding business names. A PC must include the words “professional corporation,” “professional association,” “service corporation,” “chartered,” or a recognized abbreviation, such as “PC.” Don’t assume that your business name is unique. Check with the South Carolina Secretary of State office to see if your desired name is available. You can also use ZenBusiness’s name reservation service, which checks to see if your preferred name is available and holds it for 120 days. We can also help you register a domain name for your business website at the same time.
Select a registered agent
A registered agent is a person or company registered to accept legal notices on the PC’s behalf. You can act as your own agent, appoint a friend or relative, or employ the services of a commercial registered agent. Whoever takes on this role must have a physical address in South Carolina and always be available to accept legal notices (such as subpoenas) during normal business hours. ZenBusiness’s registered agent services can connect you with an experienced agent in your area to free your schedule while helping your company stay in compliance.
Complete your Articles of Incorporation
To detail its structure, the South Carolina PC needs to complete its Articles of Incorporation. The document can be completed and filed online or printed and mailed by the owners or someone acting on their behalf. This person is known as an incorporator.
It costs $135 to file this document. Paper filings should be submitted with a check or money order payable to the Secretary of State. The Articles of Incorporation must include:
- The company’s name
- Number of shares issued
- Registered agent’s name and address
- Company’s professional services
- Name and address of each incorporator
- Proof of licenses needed for the PC’s professional services
- Signatures from a lawyer and each incorporator
Establish a corporate record
Establishing and maintaining a corporate record is a statutory requirement and good business practice. Your South Carolina PC should keep its records in its corporate headquarters or another safe location. These records include:
- The Articles of Incorporation
- A copy of the bylaws
- Shareholder agreements
- Board meeting minutes
- Bookkeeping ledgers
- Transaction and sales receipts
Designate a board of directors
You’ll need to have one or more directors on the PC’s board. New directors can be selected at the PC’s first annual meeting.
Create the bylaws for your PC
Bylaws detail how the PC will operate as a business. It’s a legal requirement for a South Carolina PC to have them. They can but don’t have to be filed with the state. In some cases, your bank or another financial institution may ask for a copy of the paperwork to check the legitimacy of your business. Bylaws may include such things as:
- The number of directors and how they’re elected
- Frequency of board meetings
- Voting rules for shareholders
- Types of corporate officers
- The rules for dealing with disputes
Hold your first board meeting
The incorporator typically organizes the first board meeting. This establishes and confirms the new company’s structure and rules and appoints officers to manage daily business tasks. Additionally, it will determine the company’s tax status and make other business decisions.
Handle your tax obligations
The IRS will tax a PC as a corporate entity known as a C corporation. This means that its shareholders pay tax on the business profits twice, once on the business level and again on their individual dividends. If the corporation elects to be an S corporation, shareholders will only pay income tax on the entity’s profits when they flow into their personal accounts.
The C corporation tax rate for revenue generated in South Carolina is 5%. Corporations must file annual tax returns and reports in South Carolina while they are registered with the Secretary of State. They must file returns by the 15th day of the fourth month after the closing of the corporation’s fiscal year.
A PC that’s given S corporation status by the IRS must pay a 0.1% annual license fee paid-in-surplus plus $15. The minimum license fee is $25. If the corporation has shareholders who are nonresidents of South Carolina, it must withhold 5% of their taxable income. The PC must file returns by the 15th day of the third month after the closing of its fiscal year.
There may be local tax requirements based on where your South Carolina PC does business and the services provided. For local information, you can check the pages of the state’s largest cities. Charleston, North Charlston, Mount Pleasant, and Rock Hill all post information about their requirements.
Obtain business licenses and permits
South Carolina doesn’t have a statewide business license, but other federal, state, and local licenses and permits may be required depending on the nature of the business. You should contact the appropriate local government offices for current information on local licenses and check that the corporation’s professionals hold licenses for their professions.
Acquire business insurance for your professional corporation
In most cases, a South Carolina PC with four or more employees will need to have workers’ compensation insurance unless it qualifies to self-insure. Although not a statutory requirement, it’s good practice to get general liability insurance and other insurance specific to your industry. For example, doctors and other professionals could consider malpractice insurance even though there’s no state-mandated minimum.
Open a business bank account
One of the final acts you’ll need to do before starting your PC is to open a business bank account. All business income and expenses should go through the account for tax and financial reporting purposes. Have your EIN and incorporation documents ready when you apply.
Ready to launch your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
South Carolina Professional Corporation FAQs
What are the filing fees for a South Carolina professional corporation?
The filing fee for Articles of Incorporation for a professional corporation is $135. Filings can be completed online or delivered to the Secretary of State in Columbia with a check or money order.
Do I need a lawyer to form a South Carolina professional corporation?
Yes. South Carolina is unique in requiring a lawyer’s signature to file Articles of Incorporation.
Does South Carolina have other professional entity types?
No. However, one or more licensed professionals can form an LLC, and two or more professionals can share a limited liability partnership (LLP).
Can professionals from different fields form a PC together?
Yes. A PC can operate in more than one field, including ancillary services related to its core professions, as long as such activities are approved by the relevant licensing authority.