The Palmetto Advantage: How to Incorporate in South Carolina

Published: June 22, 2023 • Incorporation
South Carolina Corporation Formation Guide | Title 33 Pillar
South Carolina flag

South Carolina corporation formation hub

Title 33 corporations carry attorney-signature requirements, CL-1 filings, statutory close options, professional overlays, and benefit reporting obligations. This guide maps every decision point—from standard C-corp setup through foreign qualification and tax incentives—so you can navigate South Carolina’s attorney-centric corporate regime with confidence.

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Authority Title 33 Chapters 1–17, Close Corp Supplement (Ch. 18), Professional Corp Supplement (Ch. 19), Benefit Corp Act (Ch. 38), SOS Business Filings, DOR license-tax bulletins.
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Compliance $135 formation (includes CL-1), attorney certification mandatory, annual license fee (0.1% of capital + $15), flat 5% income tax, single-sales-factor apportionment.
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Overlays Statutory close corporation option without shareholder cap, professional corporations for licensed services, and benefit corporations requiring benefit directors and reports.

South Carolina corporate landscape

The 1988 Business Corporation Act gives founders four parallel tracks—standard business corporation, statutory close corporation, professional corporation, and benefit corporation—that can be layered to fit ownership and mission goals. South Carolina is attorney-centric: Articles must be certified by a licensed SC attorney, and the Secretary of State will reject filings that lack the certification clause. Combine that with CL-1 filings, annual license fees, and foreign qualification penalties, and you have a jurisdiction where planning beats improvisation.

Entity menu

Type Statute Highlights
Business corporation Title 33 Chs. 1–17 Default stock corporation; can elect S-corp for tax; requires attorney certification and CL-1.
Statutory close corporation Ch. 18 Relaxed formalities, no shareholder cap, transfer restrictions, ability to eliminate board, special share legends.
Professional corporation Ch. 19 Only licensed professionals may own shares; mandatory repurchase provisions; can overlap with close/benefit corp.
Benefit corporation Ch. 38 General and specific public-benefit purpose, benefit director, annual benefit report with third-party standard.

Go/no-go considerations

  • Need SC operations? Form here or foreign qualify; failing to do so triggers penalties and bars lawsuits.
  • Professional practices (law, medicine, accounting) usually require PC status plus board approvals.
  • Family businesses wanting stock but LLC-like flexibility should evaluate statutory close corp overlays.
  • Mission-driven founders can add benefit language without losing access to equity financing.

Key SC quirks

  1. Attorney licensed in SC must certify Articles—out-of-state DIY filings often fail.
  2. CL-1 initial report with $25 license fee is due at formation; no CL-1, no good standing.
  3. Annual license fee (0.1% of capital + $15) is filed with SC1120/1120S even for S-corps.
  4. Statutory close corps aren’t limited to 50 shareholders, unlike many states.
  5. Benefit corps must appoint benefit directors and distribute reports within 120 days of FY-end.
When a corporation beats an LLC.

If you’re pursuing institutional equity, handing shares to licensed professionals, planning QSBS eligibility, or needing complex stock structures, the SC corporation is the better canvas. The LLC remains simpler for most pass-through operations, but the corporate form—especially statutory close—is often the sweet spot when you need stock plus LLC-like informality.

Attorney certification requirement

The Secretary of State’s FAQ is unambiguous: an attorney licensed to practice in South Carolina must sign the Articles of Incorporation certifying that Chapter 2 requirements have been met. This differs from most states and is a powerful gatekeeping mechanism.

Certification language

Most Articles end with a paragraph such as:

I, [Attorney Name], an attorney licensed to practice in the State of South Carolina, certify that the corporation has complied with the requirements of Chapter 2, Title 33 of the 1976 South Carolina Code of Laws relating to the Articles of Incorporation.

The attorney’s signature, printed name, and Bar number accompany the certificate. Self-help filings without this clause are rejected.

Workflow implications

  • Founders must engage SC counsel (or co-counsel) before filing to draft/review Articles.
  • Multi-state law firms typically coordinate with SC partner firms to secure the certification.
  • DIY platforms often outsource to SC attorneys for signature; expect additional fees.
  • Attorney review is an opportunity to plug governance gaps, add close/benefit language, and ensure CL-1 accuracy.
Professional responsibility.

Because the attorney certifies compliance, errors can expose counsel to malpractice claims. Experienced SC practitioners build pre-filing checklists covering share structure, RA consent, incorporator authority, and optional overlays to satisfy ethical obligations.

Formation workflow (standard corporation)

Use this step-by-step to shepherd clients from idea to charter to post-filing compliance. Each step calls out South Carolina-specific traps—attorney certification, CL-1 timing, share legends, and DOR registrations.

Pre-filing decisions

Entity overlays Decide whether to remain a plain business corporation or add statutory close, professional, or benefit language. Overlay elections must be included in Articles.
Tax posture Model C-corp vs S-corp federal/SC elections; note S-corp still files SC1120S + license fee.
Capital structure Plan authorized shares, par value, and classes. Consider QSBS requirements, investor preferences, and statutory close restrictions.
Name clearance Run SOS search; ensure name contains Corp/Inc/Company/Limited or abbreviations. Reserve name if necessary.
Registered agent Secure a registered agent with SC street address. RA must consent; RA info appears in Articles and CL-1.

Articles of Incorporation contents

Requirement SC-specific notes Optional add-ons
Corporate name Must be distinguishable and include Corp/Inc/Company/Limited or abbreviations. For foreign names, adopt alternate name if conflict.
Authorized shares State number, classes, and any series; par value optional. Include blank-check preferred language or board-authorized series if needed.
Registered office/agent Provide SC street address and agent name; PO boxes forbidden. List RA email for courtesy notices if portal allows.
Incorporators Names and addresses of each incorporator. Most practitioners use attorney or paralegal; swap to board after organization.
Purpose “Any lawful business” acceptable; PCs/benefit corps require specific language. List NAICS/industry descriptors for incentives.
Directors/officers Optional; often added to help banks verify authority. Include initial board for professional or benefit corp clarity.
Attorney certification Mandatory SC-licensed attorney signature and certification paragraph. Some lawyers also include Bar number and firm address on Articles.
Overlay statements Elect statutory close, professional, or benefit status here. Combine overlays (e.g., statutory close professional benefit corp) with proper cross-references.

CL-1 Initial Annual Report of Corporations

What CL-1 captures

  • Corporate name, FEIN (if available), and principal office address.
  • Registered agent details (mirroring Articles).
  • Capital structure: number of shares issued, par value, and paid-in capital.
  • Accounting year end and first year of business activity.

Filing logistics

  • File online with Articles (recommended) or mail to DOR within 60 days of using capital in SC.
  • Fee: $25 initial license fee included in the $135 formation cost.
  • Foreign corporations file CL-1 with certificate of authority applications.
  • Missing CL-1 jeopardizes good standing and creates DOR headaches later.

Post-filing implementation

Organizational meeting Adopt bylaws, elect directors/officers, authorize share issuance, approve indemnification agreements, adopt banking resolutions.
Share issuance Prepare subscription agreements, share certificates (with legends for close/PC/benefit corps), update stock ledger.
Corporate records Set up minute books, digital vault, and board portal to track consents and shareholder agreements.
Regulatory accounts Obtain EIN, register with SCDOR (corporate income/license tax, withholding, sales/use), and DEW (UI) as needed.
Licensing & incentives Apply for local business licenses, evaluate job tax credits, investment credits, port credits, R&D credits.
Attorney tip.

Because the attorney signs Articles, most SC lawyers keep engagements open until organizational meetings conclude and CL-1 confirms with DOR. Build that into your client timeline so everyone knows the “formation” includes post-filing housekeeping.

Shares, governance, and compliance frameworks

South Carolina corporations let you tailor share structures and governance to investor expectations. Whether you’re running a close-knit family business or targeting venture dollars, you’ll want to set up robust bylaws, shareholder agreements, and board processes from day one.

Share structure templates

Scenario Authorized shares Notes
Bootstrapped service firm 10,000 no-par common shares Low authorized count keeps fees minimal; easy to allocate founder percentages.
Venture-ready startup 10,000,000 common, 5,000,000 blank-check preferred Supports multiple rounds; include board authority to designate series and protective provisions.
Professional corporation 100 par-value shares Simplifies equal ownership among licensed professionals; overlay share legends required.
Statutory close corp 1,000 common shares Limited shareholders; build-in transfer restrictions and buy-sell formulas.

Bylaws essentials

Board composition

  • Define board size, staggered terms, removal standards, and vacancy filling.
  • Statutory close corps can eliminate the board; include fallback provisions.
  • Benefit corps must appoint benefit directors; bylaws should articulate their duties.

Meetings & consents

  • Set regular board/stockholder meeting cadence; allow remote meetings with consent.
  • Adopt written consent procedures consistent with §§ 33-7-104 and 33-8-210.
  • Close corps may rely heavily on written consents; document them meticulously.

Officer roles

  • Define CEO/President, CFO/Treasurer, Secretary responsibilities.
  • Permit combined offices for small corps; specify authority limits for statutory close corps.
  • Professional corps may require licensed officers per board rules.

Stock transfer restrictions

  • For close corps and PCs, embed transfer restriction references in bylaws to complement Articles and share legends.
  • Benefit corps should ensure transfers preserve mission commitments; require board approval for new investors.

Shareholder agreements

Especially in statutory close corporations, the shareholder agreement is effectively a partnership agreement. Consider including:

  • Buy-sell triggers (death, disability, bankruptcy, divorce, termination of employment, license revocation).
  • Valuation methodologies (fixed price, formula, appraisal) for buyouts.
  • Mandatory mediation/arbitration for disputes before court action.
  • Optional board elimination and delegation of management to shareholders (per § 33-18-210).
  • Protective provisions for benefit duties (mission lock) or professional compliance.
Documentation stack.

SC corporations typically maintain: Articles + overlays, bylaws, organizational minutes, shareholder agreements, subscription agreements, stock ledger, share certificates (with required legends), RA appointment, CL-1 confirmation, EIN letter, DOR registrations, and board policies (whistleblower, expense, benefit oversight).

Statutory close corporations

Chapter 18 of Title 33 gives South Carolina corporations LLC-like flexibility without limiting shareholder count. Close corporations waive formalities, restrict transfers, eliminate the board, and empower courts to remedy deadlock. They are a powerhouse for family businesses and closely held ventures.

Electing close status

  • Initial election: include statement in Articles that corporation is a statutory close corporation.
  • Existing corporation: amend Articles with two-thirds approval of each class; dissenters may demand fair value.
  • Termination: similar two-thirds vote with dissenters’ rights; sometimes triggered automatically if transfer restrictions are breached.

Transfer restrictions & legends

  • Default rule: transfers limited to the corporation, existing shareholders, family, or others permitted in Articles.
  • Share certificates must include conspicuous legend referencing the statutory close corp status and restrictions.
  • Uncertificated shares require written notice containing the same legend language.

Governance flexibilities

No-board option

Shareholders may eliminate the board entirely and manage directly via shareholder agreement (§ 33-18-210). This brings corporate governance close to partnership-style management.

Relaxed formalities

Failure to observe corporate formalities is explicitly not a basis for imposing personal liability on close-corp shareholders (§ 33-18-250). This mirrors LLC protections and is a major selling point.

Judicial remedies

Courts can order buyouts or dissolution for oppressively acting majority shareholders or deadlock (§§ 33-18-400–430), providing safety valves often missing in standard corps.

Overlap with benefit/PC

You can stack close status with professional or benefit corp overlays. Articles must clearly state each election, and share legends may need to cover multiple statutes.

Practical note.

Because formalities are relaxed, close corporations rely heavily on well-drafted shareholder agreements. Without them, disputes devolve into statutory litigation quickly. I build boardless governance packages that include decision matrices, buy-sell protocols, and exit ramps.

Professional corporations (PCs)

Licensed professions—from law and medicine to engineering and architecture—often must operate through professional corporations under Chapter 19. PCs uphold licensing-board rules, restrict ownership to qualified professionals, and mandate share repurchase when qualifications lapse.

Eligibility & purpose

  • PCs exist to render services that can only be performed by licensed professionals (e.g., physicians, attorneys, CPAs).
  • Articles must limit purpose to rendering professional services and ancillary activities.
  • PCs can provide services in multiple related professions if permitted by law and board rules.

Ownership & transfer

  • Only “qualified persons” (licensed individuals, certain partnerships/PCs) may own shares.
  • Disqualified shareholders (lost license, death) must have shares repurchased by corporation or transferred to qualified persons.
  • Share certificates require legend referencing Chapter 19 restrictions and repurchase obligations.

Governance overlaps

  • PCs may adopt statutory close corp status for flexibility.
  • PCs can elect benefit status; Chapter 38 explicitly allows professional benefit corporations.
  • Licensing boards often require majority of directors and officers to be licensed professionals.

Liability

  • PC shields shareholders from contractual liabilities but not from their own malpractice.
  • Malpractice insurance and shareholder indemnity agreements remain critical.
  • Professional misconduct can trigger forced redemption and disciplinary action by the board.
Attorney action list for PCs.
  • Coordinate with licensing board for entity approval letters or registration.
  • Draft share repurchase agreements covering disqualification events.
  • Ensure all share certificates and uncertificated notices include Chapter 19 legend.
  • Set up compliance calendar for annual board filings or license renewals.

Benefit corporations

South Carolina’s Benefit Corporation Act (Ch. 38) lets you embed a public mission into your charter. Benefit corps pursue general and specific public benefits, appoint benefit directors, and report annually to shareholders and (optionally) the Secretary of State.

Formation & conversion

New corporation

  • Articles must state the corporation is a benefit corporation subject to Chapter 38.
  • Identify at least one specific public benefit (e.g., improving health, preserving environment, promoting economic opportunity).
  • Include attorney certification plus any other overlays.

Existing corporation

  • Amend Articles to become a benefit corp with two-thirds shareholder approval of each class/series.
  • Provide dissenters’ rights; pay fair value to dissenting shareholders.
  • Terminating benefit status also requires two-thirds approval.

Governance obligations

Benefit director

Must appoint an independent benefit director responsible for preparing an annual opinion on whether the corporation acted in accordance with its benefit purposes; if no board, appoint benefit officer.

Decision framework

Directors must consider shareholders, employees, customers, community, environment, short- and long-term interests, ability to accomplish general and specific public benefits.

Benefit enforcement proceedings

Only the corporation, shareholders, directors, beneficial owners, and persons designated in articles may bring enforcement actions alleging failure to pursue benefit goals; no money damages, only injunctive/declaratory relief.

Benefit report

Prepare annual benefit report within 120 days of fiscal year end, using third-party standard; send to shareholders, post on website, and file with SOS if required. Include benefit director’s opinion.

Mission lock.

Benefit corp status is a strong signaling device but requires ongoing administrative work. I help clients integrate ESG metrics, board dashboards, and third-party standards (B Lab, SASB, etc.) so benefit reporting aligns with investor expectations.

Taxes, license fees, and incentives

South Carolina corporations pay a flat 5% corporate income tax, file annual license fees, and can access a menu of credits. S-corps pass income to shareholders but still file SC1120S and pay license fees. This section breaks down the math.

Entity-level taxes

Item C-corp S-corp Notes
Income tax 5% of SC net income (Form SC1120) Generally not paid at entity level; income flows to shareholders. Single-sales-factor apportionment for most sectors.
License fee 0.1% of capital stock and paid-in surplus + $15 (min $25) Same license fee applies; filed on SC1120S. Due annually with income tax return.
Estimated tax Quarterly estimates if tax > $100. N/A (shareholders may owe estimated personal taxes). License fee portion may require estimated payments for large capital accounts.

State incentives snapshot

Jobs tax credit

Credit against corporate income tax ranging from $1,500 to $8,000 per job over five years, depending on county tier. Corporations can carry forward unused credits for up to 15 years.

Investment credit

Credit for qualified manufacturing/production equipment; percentage varies by county and amount invested.

Corporate headquarters credit

Credit of 20% of qualifying headquarters facility costs plus 20% of direct lease costs for HQs meeting job/investment thresholds.

Port volume increase credit

Credit for expanding port cargo volume through SC ports; amounts based on TEUs handled and business type.

Research & development credit

Credit equal to 5% of qualified research expenses exceeding prior-year base amount; limited to 50% of tax liability.

Comparative tax table

State Corporate income tax License/franchise fee Notes
South Carolina 5% flat 0.1% of capital + $15 (min $25) Single-sales-factor apportionment is favorable for exporters.
North Carolina 2.5% (dropping to 0% by 2030) $0 No license fee, but higher franchise tax previously.
Georgia 5.75% $50 annual registration No statewide license fee but local occupation taxes.
Florida 5.5% $150 annual report No license fee but intangible tax considerations.
Delaware 8.7% Franchise tax up to $200k Preferred for VC deals but expensive.
Tax scheduling.

I build tax calendars mapping CL-1, SC1120/1120S, estimated payments, and incentive compliance so corporate finance teams never miss a license-fee deadline.

Foreign corporations doing business in South Carolina

Corporations formed elsewhere must secure a South Carolina certificate of authority before “transacting business.” Failure to qualify blocks access to SC courts and triggers civil penalties up to $1,000 per year. Foreign filings also require CL-1 and the minimum license fee.

Certificate of authority process

1. Name clearance Ensure foreign name is available; adopt a fictitious name if conflict exists (§ 33-15-106).
2. Registered agent Appoint SC registered agent and registered office.
3. Documents Gather certificate of existence (≤30 days old) from home jurisdiction, board resolutions authorizing qualification, and CL-1 information.
4. File application Submit application for certificate of authority, CL-1, and fees ($110 for certificate + $25 license fee + any additional license fees based on capital).
5. Post-approval File annual license fee with SC1120/1120S; maintain RA; renew local licenses.

Consequences of noncompliance

Inability to sue

Foreign corps lacking authority may not maintain actions in SC courts until they obtain authority and pay all fees/penalties. They can still defend suits.

Penalties

Up to $1,000 per year for each year unqualified, plus back license fees; the Attorney General can enforce compliance.

Tax exposure

DOR can retroactively assess corporate income tax, license fees, and withholding obligations for unregistered years.

Reputation

Customers and lenders often require certificate of authority and good-standing certificates; failing to qualify jeopardizes deals.

Attorney tip.

When multi-state clients expand into SC, I coordinate simultaneous RA onboarding, CL-1 paperwork, DOR registrations, and municipal licenses to avoid “doing business” before authority is granted.

Deep-dive FAQ

These frequently asked questions capture nuanced issues unique to South Carolina corporations.

Do I need a South Carolina attorney if my corporation is formed elsewhere?

For domestic filings, yes—Articles require an SC-licensed attorney’s signature. Foreign corporations technically do not need attorney certification on their application, but counsel is strongly recommended to navigate CL-1, license fees, and local compliance.

Can I convert an existing LLC into a corporation?

Yes. File Articles of Incorporation and a plan of conversion under §§ 33-11-101 et seq., then dissolve or merge the LLC as appropriate. The attorney certification still applies to the newly formed corporation.

How do statutory close corporations handle new investors?

Transfers are limited by § 33-18-110. To admit new investors, amend Articles/shareholder agreements to permit transfers or approve by unanimous shareholder consent. Share certificates must be reissued with updated legends.

Can a professional corporation be an S-corp?

Yes. PCs can elect S-corp status for federal/SC tax purposes. However, shareholders must be individuals or qualifying trusts; entity shareholders (like partnerships) are generally not allowed for S-corps, which dovetails with PC ownership restrictions.

What is the timing for benefit reports?

Benefit corporations must deliver annual benefit reports to shareholders within 120 days of fiscal year end. Many clients align the benefit-report cycle with board retreats to review impact metrics and plan improvements.

Does South Carolina allow domestication?

Yes. Corporations may domesticate into or out of South Carolina under Chapter 9 (Domestication). Articles of domestication require attorney certification when domesticated into SC.

How do I handle multi-entity structures?

Popular structures include holding companies with statutory close status controlling subsidiary PCs or benefit corps. Build intercompany agreements, management services agreements, and consolidated compliance calendars to align filings.

My South Carolina corporation services

I personally manage South Carolina corporation engagements—no outsourcing to anonymous filing shops. Every charter, shareholder agreement, and compliance roadmap is attorney-drafted with the state’s unique requirements in mind.

Core

Formation + CL-1 package

$1,450 flat
  • Attorney consultation to scope overlays (standard, close, professional, benefit).
  • Articles drafting, attorney certification, SOS filing, and CL-1 submission.
  • Registered agent coordination + RA consent letters.
  • Organizational minutes, bylaws template, share ledger, stock certificates with required legends.
  • EIN assistance and DOR/CL-1 confirmation tracking.
Comprehensive

Governance & overlays

$2,250+
  • Custom bylaws, shareholder agreements, buy-sell agreements, and board policies.
  • Statutory close corp implementation (legends, transfer logs, court-proof provisions).
  • Professional corp compliance with licensing boards, share repurchase agreements, and malpractice planning.
  • Benefit corp mission frameworks, benefit director charters, and report templates.
  • Incentive planning (jobs credit, HQ credit) and municipal licensing roadmap.
Ongoing

Compliance & expansion

$1,600+/year
  • Annual license fee preparation, SC1120/1120S coordination with CPA, and benefit reports.
  • Foreign qualification/withdrawal, domestication, mergers, and reorganizations.
  • Board/stockholder meeting packages, consent drafting, and record book maintenance.
  • CTA/BOI filings, ownership ledger upkeep, municipal license renewals.
  • Strategic planning sessions for fundraising, ESOPs, or multi-entity structures.

Schedule a South Carolina corporate strategy session

I reserve dedicated slots each week for new corporate engagements. Use Calendly or email me directly; I respond within one business day and personally handle every matter.

Multi-year compliance calendar

South Carolina corporations thrive when compliance is choreographed across the year. Below is a template calendar I share with clients covering tax filings, license fees, board meetings, benefit reports, and municipal renewals.

Annual cadence

Month Action items Notes
January
  • Finalize prior-year financial statements for board review.
  • Prepare federal/state payroll reports (941, 940, W-2, 1099).
  • Kick off benefit-report data collection (if benefit corp).
Board winter meeting approves audit plan and incentive targets.
February
  • Compile information for SC1120/SC1120S draft.
  • Review license fee calculation against prior-year capital contributions.
  • Update shareholder ledger for year-end changes.
Close corporations often schedule shareholder check-ins for buy-sell updates.
March
  • File federal returns (C-corps) or extensions.
  • Conduct first-quarter board meeting; approve benefit metrics.
  • Trigger CL-1 review for newly qualified foreign subs.
Professional corps confirm all shareholders/officers maintain active licenses.
April
  • File SC1120/SC1120S and pay license fee.
  • Deliver annual shareholder letter summarizing results.
  • Review municipal license renewal schedule (Charleston, Greenville, etc.).
Benefit corporations finalize draft benefit report for board approval.
May
  • Pay Q1 estimated taxes if applicable.
  • Hold investor/owner meeting for midyear strategy.
  • Update compliance binders with filed returns.
Statutory close corps review transfer ledgers and confirm restrictions honored.
June
  • Quarterly board meeting focusing on operations, risk, and incentive targets.
  • Implement midyear internal audit of minute book and resolutions.
  • Foreign corps verify RA service and update contact info.
PCs coordinate malpractice insurance renewals.
July
  • Pay Q2 estimated taxes.
  • Draft second-half governance calendar (board retreats, benefit committee meetings).
  • Launch annual D&O questionnaire process.
Close corps update shareholder contact data and buy-sell valuations.
August
  • Conduct compliance audit of share certificates and legends.
  • Review DOR account notices, reconcile payments.
  • Prep for fall board/stockholder meetings.
Benefit corps gather stakeholder feedback for report narrative.
September
  • Pay Q3 estimated taxes.
  • Board fall meeting covers budgeting, capital plan, incentive metrics.
  • PCs confirm disciplinary actions (if any) and share transfers per statute.
Foreign corps ensure certificates of authority remain active.
October
  • Draft next-year budget and capital contributions.
  • Benefit corp finalizes report content.
  • Review RA engagements and consider changes.
Statutory close corps evaluate whether board structure still fits.
November
  • Annual shareholder meeting (if not held earlier) to elect directors and ratify actions.
  • Finalize year-end incentive payouts.
  • Update corporate resolutions for banking and contracts.
Benefit corp stakeholders review draft report for feedback.
December
  • Pay Q4 estimated taxes.
  • Close board books; compile annual governance report.
  • Deliver benefit report to shareholders within 120 days of FY-end.
PCs perform year-end license checks and plan share redemptions if necessary.
Customizing the calendar.

Each engagement receives a tailored version of this calendar reflecting fiscal year, benefit-report deadlines, credit compliance, and municipal license cycles. I integrate the calendar with project management tools so executives and admins stay aligned.

Sample engagement playbooks

To illustrate how these rules play out, here are anonymized case studies showing different overlay combinations and compliance challenges.

Statutory close professional corporation

A Charleston medical practice with six physician-shareholders wanted stock for incentive alignment yet LLC-style flexibility. We formed a statutory close professional corporation with the following steps:

  • Drafted Articles electing both close and professional overlays, plus benefit language for community clinics.
  • Created shareholder agreement eliminating the board, establishing capital call rules, and embedding mandatory mediation.
  • Custom-designed share certificates with dual legends referencing Chapters 18 and 19.
  • Implemented quarterly compliance check-ins for license renewals and buy-sell valuations.

Result: physicians maintain corporate liability shield, avoid LLc attorney-cert trap, and enjoy simplified governance.

Benefit corporation scaling nationally

A Columbia-based climate-tech startup sought mission lock before raising Series A. We layered benefit corp provisions on top of a venture-style charter:

  • Authorized 15 million shares (common + blank-check preferred) with protective provisions acceptable to VCs.
  • Appointed independent benefit director and built committee charter referencing SASB metrics.
  • Crafted benefit report template aligned with third-party standard and investor dashboards.
  • Coordinated foreign qualification in NC, GA, and VA with consistent mission statements.

Investors appreciated the clear stakeholder framework, and the company now publishes public benefit reports each spring.

Foreign corporation remediation

An out-of-state manufacturer operated in SC for three years without qualification. We rectified the issue by:

  • Obtaining retroactive certificate of authority and filing past-due CL-1s with license fees.
  • Negotiating penalty abatements with DOR using voluntary disclosure.
  • Implementing compliance calendar for municipal licenses in Charleston and Jasper counties.
  • Training internal counsel on when future expansions trigger qualification.

The company now maintains spotless compliance records and can enforce contracts in SC courts.

Document toolkit & resource library

I maintain a curated library of statutes, forms, and checklists for South Carolina corporations. Clients receive tailored versions during engagements.

Core forms

  • F0010 – Articles of Incorporation (benefit, professional, statutory close combined form).
  • F0011 – Articles of Amendment for overlay elections.
  • F0024 – Application for Certificate of Authority (foreign corp).
  • F0137 – Statutory close corporation share legend template.
  • CL-1 – Initial Annual Report of Corporations (DOR).

Reference statutes

  • Title 33, Chapter 1 – General Provisions.
  • Chapter 2 – Incorporation; shares.
  • Chapter 5 – Office and agent.
  • Chapter 18 – Statutory Close Corporations Supplement.
  • Chapter 19 – Professional Corporations.
  • Chapter 38 – Benefit Corporations.

Checklists

  • Attorney certification pre-filing checklist (14 items covering RA consent, share structure, overlays, CL-1 data).
  • Statutory close corp implementation checklist (legends, shareholder agreements, board elimination steps).
  • Professional corp compliance checklist (license verification, share transfer procedures, board composition).
  • Benefit corp reporting checklist (data sources, third-party standard, director opinions, dissemination plan).
  • Foreign qualification readiness checklist (nexus analysis, home-state certificates, DOR registrations).

Board and committee policy suite

Sound governance requires policies tailored to overlays and investor expectations. Here is the suite I typically deploy.

Board-level policies

  • Charter defining board responsibilities, meeting cadence, and fiduciary duties.
  • Delegation of authority matrix for approving contracts, debt, and equity issuances.
  • Whistleblower and complaint procedures aligning with Sarbanes-Oxley best practices.
  • Code of ethics tailored to professional or benefit obligations.
  • Document retention schedule covering digital records, board portals, and shareholder communications.

Committee charters

  • Audit/finance committee (budget oversight, DOR compliance, license-fee review).
  • Compensation committee (executive pay, incentive alignment with benefit metrics).
  • Benefit committee (stakeholder engagement, report drafting, impact metrics).
  • Professional practice committee (for PCs) ensuring adherence to licensing standards.
  • Governance committee (board evaluations, succession planning, shareholder relations).

Glossary of South Carolina corporate terms

This glossary helps teams unfamiliar with South Carolina’s jargon quickly onboard.

Term Definition
Attorney certification Statement signed by SC-licensed attorney confirming compliance with Chapter 2 requirements for Articles.
CL-1 Initial Annual Report of Corporations; filed at formation to pay $25 license fee and register with DOR.
License fee Annual fee equal to 0.1% of capital stock and paid-in surplus plus $15; minimum $25.
Statutory close corporation Corporation electing Chapter 18 overlay for relaxed formalities, transfer restrictions, and shareholder-centric governance.
Benefit director Independent director responsible for overseeing and reporting on benefit obligations.
Professional corporation Entity formed under Chapter 19 to render services requiring professional licenses.
Certificate of authority Authorization granted to foreign corporations to transact business in South Carolina.
Benefit report Annual report measuring general and specific public benefits using third-party standards.

Due diligence & exit readiness checklist

South Carolina buyers, investors, and lenders scrutinize corporate compliance before closing deals. Use this diligence matrix to keep files transaction-ready.

Corporate records

  • Articles + amendments + restatements (including benefit/close/pro overlays).
  • Attorney certification copy and contact info for signing counsel.
  • Bylaws, shareholder agreements, buy-sell agreements, and board policies.
  • Minute books with signed resolutions for major actions (equity, debt, acquisitions).
  • Stock ledger, share certificates, option/warrant registers, and capitalization table.

Regulatory filings

  • CL-1 proof of filing (receipt from DOR or SOS).
  • Federal EIN confirmation (CP 575) and S-election acceptance (if applicable).
  • SC1120/SC1120S returns with license fee schedules for last five years.
  • Benefit reports, benefit director opinions, and third-party assessments.
  • Professional license certificates for shareholders, directors, officers (PCs).
  • Foreign certificates of authority, good-standing certificates, and local licenses.

Contracts & liabilities

  • Customer and vendor contracts with change-of-control clauses flagged.
  • Leases, loan agreements, security agreements, and board approvals.
  • Indemnification agreements, D&O coverage, malpractice policies (PCs).
  • Benefit corp stakeholder agreements, grant documentation, and ESG commitments.

Operational data

  • Financial statements (audited or reviewed) for three years.
  • Schedule of capital stock and paid-in surplus supporting license fee calculations.
  • Job credit, investment credit, HQ credit documentation with compliance status.
  • Municipal license receipts, zoning approvals, and property tax filings.
Exit-readiness engagements.

I often run pre-sale diligence sweeps: identify missing consents, cure RA lapses, update CL-1 data, refresh shareholder agreements, and compile digital data rooms so transactions close smoothly.

Appendix: statutes, agencies, and support contacts

Keep this appendix handy when interacting with South Carolina agencies. It lists statutory citations, filing portals, mailing addresses, and contact notes.

Secretary of State (Business Filings Division)

  • Online portal: businessfilings.sc.gov
  • Mailing address: 1205 Pendleton Street, Suite 525, Columbia, SC 29201.
  • Phone: 803-734-2158 (information only; filings must be online/mail).
  • Forms: F0010 (Articles), F0011 (Amendment), F0024 (Foreign Authority), F0137 (Share legend), F0045 (Articles of Dissolution).
  • Processing tips: Online filings processed in 1–2 business days; mailed filings 7–10 days.

South Carolina Department of Revenue

  • Website: dor.sc.gov
  • CL-1 submission: included with online formation or mail to PO Box 10053, Columbia, SC 29202.
  • Tax portal: MyDORWAY for license fees, corporate returns, withholding, sales/use tax.
  • Key forms: SC1120, SC1120S, CL-1, WH-1605 (withholding), ST-3 (sales tax).
  • Contact: 844-898-8542 (corporate tax help line).

Department of Employment and Workforce

  • Website: dew.sc.gov
  • Employer registration for unemployment insurance; file quarterly UI reports.
  • Ensure corporate officers classified correctly (especially in PCs).

Municipal/county licensing offices

Each city/county sets its own contact info and deadlines. Examples:

  • Charleston: Revenue Collections Division, 2 George Street, Charleston, SC 29401; charleston-sc.gov.
  • Columbia: Business License Division, 1136 Washington Street, Columbia, SC 29201.
  • Greenville: Revenue Division, 206 S. Main Street, Greenville, SC 29601.
  • Richland County: Business Service Center, 2020 Hampton Street, Columbia, SC 29204.

Statutory citations quick list

Topic Statute Usage
Articles content § 33-2-102 Minimum information required in Articles of Incorporation.
Registered agent § 33-5-101 Requirement to maintain registered office/agent.
Statutory close election § 33-18-103 Articles language to elect close status.
Professional corp ownership § 33-19-110 Shareholder qualification rules.
Benefit corp conversion § 33-38-210 Two-thirds vote and dissenters’ rights.
Foreign corp authority § 33-15-103 Application requirements and attachments.
License fee § 12-20-50 Calculation of corporate license fee.

Keeping these references in a consolidated appendix ensures your team can answer regulator questions quickly.