Form Your S Corporation in South Carolina

An S corporation is a federal tax election, not a separate state entity. You first form a standard corporation by filing Articles of Incorporation with the South Carolina Secretary of State for $135, then file IRS Form 2553 to elect S-corp tax treatment.

The South Carolina Secretary of State charges a $135 filing fee for the Articles of Incorporation. Online filings are typically approved in about 24 hours, while mailed filings take roughly 3 business days.

File IRS Form 2553 within 75 days of forming your corporation, or by March 15 to have the election apply to the current tax year. All shareholders must sign the form.

South Carolina does not require a separate Secretary of State annual report. Your S corporation instead files an annual income tax return (Form SC1120, including the initial CL-1) with the South Carolina Department of Revenue.

Income passes through to shareholders and avoids the entity-level double tax that C corporations face. South Carolina still applies its 5% corporate income tax at the entity level for certain items, and the state sales tax is 6%; there is no LLC-style franchise tax, though a license fee may apply.

An S corporation may have no more than 100 shareholders, all of whom must be US citizens or residents, and it may issue only one class of stock. Foreign owners are not eligible, so non-resident founders should consider a C corporation or LLC instead.

Shareholder-employees must take a reasonable W-2 salary, but profits distributed above that salary are not subject to self-employment or payroll taxes. This split between salary and distributions is the core payroll-tax savings of the S-corp election.

No. Under FinCEN's March 2025 interim final rule, US domestic entities and US persons are exempt from Beneficial Ownership Information reporting. Only foreign-formed entities registered in a US state still file.