Starting a Professional Corporation in South Carolina 2024: Ultimate Guide

How to Start a Professional Corporation in South Carolina

Licensed professional? Level up your business with South Carolina professional corporation! Enjoy unique benefits like South Carolina LLC, such as limited liability, tax perks, and a polished image. Our step-by-step guide unravels the essentials for smooth compliance and the right fit. LLCBase has your back with expert guidance, so make an informed decision and triumph in South Carolina with your professional corporation today!

This guide will review the requirements for starting a professional corporation in South Carolina, explore the advantages and disadvantages of this business structure, and help you determine if it is the right fit for your business goals.

What is a Professional Corporation

A Professional Corporation (P.C.) is a unique type of corporation designed for licensed professionals, such as doctors, dentists, lawyers, architects, and accountants. Forming a P.C. allows licensed professionals to offer their services through a corporate structure, providing them with the benefits of a traditional corporation, such as limited liability protection and tax advantages. Forming a professional corporation in South Carolina is a popular choice due to the thriving professional landscape and business-friendly environment. When starting a professional corporation, choose a reliable formation service in South Carolina.

The primary purpose of South Carolina Professional Corporation is to protect its owners from personal liability for the corporation’s actions. The shareholders’ personal assets are protected if the professional corporation faces legal issues. Moreover, South Carolina professional corporations can offer certain tax benefits, such as deducting employee benefits and operating expenses. These advantages make forming a professional corporation an attractive option for many professionals in South Carolina.

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Who Can File Under Professional Corporation Laws

Under South Carolina Professional Corporation laws, only certain licensed professionals are eligible to form a professional corporation. The specific professions allowed to form a P.C. may vary slightly by state, but in South Carolina, the following professionals can typically form a professional corporation:

  • Physicians and Surgeons
  • Dentists
  • Chiropractors
  • Optometrists
  • Podiatrists
  • Certified Public Accountants
  • Architects
  • Engineers and Land Surveyors
  • Psychologists
  • Marriage and Family Therapists
  • Clinical Social Workers
  • Professional Clinical Counselors
  • Veterinarians
  • Attorneys
  • Speech-Language Pathologists
  • Pharmacists
  • Registered Nurses
  • Physical Therapists
  • Occupational Therapists
  • Acupuncturists

Each profession has its governing licensing board, which sets specific rules and regulations for forming and operating a professional corporation. It is essential to check with the relevant board and state laws to ensure that your profession is eligible to form a professional corporation and to understand the specific requirements associated with your profession.

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Structure of a Professional Corporation

  • Shareholders: South Carolina Professional Corporation’s shareholders must be licensed professionals in the same field as the corporation’s purpose. For example, if a professional corporation is formed to offer legal services, all shareholders must be licensed attorneys. This requirement ensures that the professional corporation’s management comprises qualified individuals with relevant expertise.
  • Directors: The directors of a professional corporation in South Carolina are responsible for overseeing the corporation’s operations and making high-level decisions. The directors must also be licensed professionals in the same field as the corporation’s purpose. The number of directors required depends on the specific licensing board’s regulations, but typically a minimum of one director is needed.
  • Officers: The officers of South Carolina Professional Corporation manage the professional corporation. Officers typically include a President, Secretary, and Treasurer. However, additional officers can be appointed as needed. While not all officers must be licensed professionals, the President must hold a valid license in the same field as the corporation’s purpose.

Starting a Professional Corporation in South Carolina: A Guide

Here is a detailed guide to starting a professional corporation in South Carolina that you should follow.

Step 1: Appointment of Registered Agent

The first step in forming a Professional Corporation is appointing Registered Agent in South Carolina. This individual or company will act on behalf of the corporation, receiving official notices and legal documents. The agent must have a physical address in South Carolina and be available during regular business hours.

We compiled the list of the best registered agent services in South Carolina to help you choose the one you can rely on.

Step 2: Choosing the Name of the Corporation

Selecting a name for your South Carolina Professional Corporation is crucial. The name must be unique and appropriate, including the words “professional corporation” or the abbreviation “P.C.” It must also comply with the rules and regulations of the governing licensing board and should not be confusingly similar to an existing corporation’s name.

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Step 3: Drafting of By-laws

By-laws are the internal rules and regulations governing the management and operations of the professional corporation. These should include provisions related to the appointment of directors, issuance of shares, and any restrictions imposed by the licensing board.

Step 4: Appointment of Board of Directors

The board of directors oversees the management and operations of the South Carolina Professional Corporation. Directors must be licensed professionals in the same field as the corporation’s purpose.

Step 5: Conduction of Board Meetings

Regular board meetings are essential for maintaining the proper functioning and compliance of the professional corporation. The by-laws should specify the frequency, notice requirements, and procedures for conducting these meetings.

Step 6: Issuance of Corporate Shares

Shares represent ownership in the corporation. The professional corporation must issue shares to its shareholders, who must be licensed professionals in the same field. Share issuance should comply with the by-laws and any restrictions imposed by the licensing board.

Step 7: Comply with State Requirements

Forming South Carolina Professional Corporation requires compliance with specific state requirements, such as obtaining necessary permits and licenses, paying fees, and adhering to rules and regulations the governing licensing board sets forth.

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Step 8: Filing of Statement of Information

South Carolina professional corporations must file an annual report with the South Carolina Secretary of State. This document includes essential information about the corporation, including its name, address, Registered Agent, and directors.

Step 9: Getting Tax Permits from the State

The professional corporation must obtain the necessary tax permits from the South Carolina Department of Revenue, such as an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Step 10: Opening of a Bank Account

Finally, open a separate bank account for the South Carolina Professional Corporation to maintain proper accounting and financial records.

Fees Associated with Professional Corporation in South Carolina

Here are some of the most common fees when starting a professional corporation in South Carolina.

  • State Laws and Regulations: To form a professional corporation in South Carolina, it is crucial to comply with the state laws and regulations governing professional corporations. The South Carolina Code of Laws Title 33 and the specific licensing board’s regulations for each profession outline the requirements and restrictions for professional corporation formation. Before starting the process, professionals should consult with their licensing board to ensure they meet the necessary qualifications.
  • Incorporation Process: Once the licensing requirements are met, the next step to form a professional corporation in South Carolina is to draft and file the Articles of Incorporation with the South Carolina Secretary of State. This document includes essential information about the corporation, such as its name, address, purpose, and number of authorized shares. Filing the Articles of Incorporation requires a filing fee currently $110 for most professions. However, it is essential to check with the South Carolina Secretary of State for the specific fee associated with your profession.
  • Naming Requirements: You must follow specific rules when choosing a name for a Professional Corporation in South Carolina. The name must include the words “Professional Corporation,” “P.C.,” or “Prof. Corp.” Additionally, the name cannot be misleading or too similar to an existing corporation’s name. Conducting a name search with the South Carolina Secretary of State is recommended to ensure the chosen name is available. This search is free, but reserving a name before filing the Articles of Incorporation requires a reservation fee of $25 online and $25 mail.
  • Articles of Incorporation: The Articles of Incorporation is a critical document for forming a professional corporation in South Carolina. It outlines the corporation’s essential information, such as the name, address, purpose, and number of authorized shares. The Articles must also include a statement that the corporation is a professional corporation and the specific profession it practices. Once completed, the Articles of Incorporation must be filed with the South Carolina Secretary of State, accompanied by the appropriate filing fee.
  • Additional Fees and Costs: In addition to the filing fees mentioned above, forming Professional Corporation in South Carolina may involve other costs, such as:
    • Annual Report: professional corporations must file an initial Statement of Information with the South Carolina Secretary of State every In South Carolina, the annual report filing time is not applicable, as it is not a mandatory requirement. of filing the Articles of Incorporation. The filing fee for this form is $0 because it is not mandatory.
    • Licensing and Permit Fees: Depending on the specific profession, the governing licensing board may require additional licensing and permit fees.
    • Registered Agent Fee: Hiring of Registered Agent service will likely involve an annual fee of $50 – $150, which can vary depending on the service provider.
    • Legal and Accounting Fees: Forming a professional corporation may involve consulting with attorneys and accountants, which can result in additional professional fees.

Advantages of a Professional Corporation

  • Limited Liability Protection: One of the main benefits of a professional corporation is its limited liability protection to its shareholders. This means the shareholders’ assets are protected from the corporation’s debts and liabilities.
  • Tax Benefits: Professional Corporations enjoy specific tax benefits, such as deductions for business expenses and the ability to retain earnings within the corporation.
  • Business Credibility: Operating as a professional corporation can enhance the credibility and reputation of the professional services, demonstrating a commitment to compliance and professionalism.
  • Continuity of Operations: A professional corporation has a perpetual existence, ensuring the continuity of operations even if the shareholders or directors change.

Disadvantages of a Professional Corporation

  • Complexity and Cost of Formation: Forming a professional corporation can be more complex and costly than other business structures, such as sole proprietorships or partnerships.
  • Ongoing Compliance Requirements: professional corporations must adhere to ongoing compliance requirements, including regular board meetings, filing annual reports, and maintaining proper records.
  • Limited Flexibility in Management: professional corporations may need more flexibility in management, as the board of directors must consist of licensed professionals in the same field.

Taxation of Professional Corporations

Here are the taxes that your professional corporation must pay in South Carolina:

Federal income tax

A professional corporation in South Carolina is subject to federal income tax on its net earnings. However, a P.C. can elect to be taxed as an S corporation, which allows the corporation’s income, deductions, and credits to pass through to the shareholders. This can result in significant tax savings by avoiding double taxation.

State taxes

South Carolina Professional Corporation is also subject to state taxes, such as the South Carolina franchise tax, which is based on the corporation’s annual net income. Additionally, depending on the nature of its operations, the professional corporation may be subject to other state and local taxes, such as payroll and sales taxes permit in South Carolina.

Tax deductions and exemptions

A professional corporation in South Carolina can take advantage of various tax deductions and exemptions, such as deductions for employee benefits, operating expenses, and depreciation. These deductions can help reduce the corporation’s taxable income, ultimately leading to tax savings for the P.C. and its shareholders.

Alternatives to Professional Corporations in South Carolina

If you decide that a professional corporation is not for you, then you might consider the following alternatives.

  • Sole Proprietorships: A simpler business structure is where an individual operates the business under their name without limited liability protection.
  • Partnerships: Two or more individuals join to operate a business, sharing profits, losses, and responsibilities.
  • Limited Liability Companies (LLCs): A hybrid business structure that combines the limited liability protection of a corporation with the tax benefits and flexibility of a partnership.
  • S-corporations: Starting an S Corp in South Carolina avoids double taxation by allowing income, losses, and deductions to pass through to the shareholders’ personal tax returns.

FAQs

What is a professional corporation in South Carolina?
A professional corporation in South Carolina is a type of corporation formed for individuals engaged in certain professional fields, such as medicine, law, accounting, or engineering.
Can a professional corporation be formed for any field in South Carolina?
No, a professional corporation can only be formed for individuals in certain professional fields that are regulated by the state.
What are the requirements for starting a professional corporation in South Carolina?
The requirements for starting a professional corporation in South Carolina include complying with state and federal regulations, obtaining necessary permits and licenses, and filing articles of incorporation with the South Carolina Secretary of State.
What are the benefits of starting a professional corporation in South Carolina?
The benefits of starting a professional corporation in South Carolina include limited liability protection, lower taxes compared to other entities, and enhanced professional credibility.
Are there any limitations on who can own shares of a professional corporation in South Carolina?
Yes, in South Carolina, only licensed professionals can own shares or be shareholders of a professional corporation.
Can I start a professional corporation in South Carolina alone, or do I need partners?
In South Carolina, you can start a professional corporation alone, or you can team up with other professionals in your field to form a partnership.
How much does it cost to start a professional corporation in South Carolina?
The cost of starting a professional corporation in South Carolina varies depending on various factors, such as legal fees, registration fees, and other necessary expenses.
What is the registration process for a professional corporation in South Carolina?
The registration process for a professional corporation in South Carolina involves filing articles of incorporation with the Secretary of State, obtaining necessary business licenses and permits, and meeting other state and federal regulations.
How long does it take to register a professional corporation in South Carolina?
In South Carolina, it typically takes around 7-10 business days to register a professional corporation once all the required documents have been submitted.
Do I need to hire a lawyer to start a professional corporation in South Carolina?
While it’s not mandatory to hire a lawyer to start a professional corporation in South Carolina, it’s highly recommended to ensure compliance with state and federal regulations and to prevent legal issues.
Can my professional corporation have more than one office in different areas of South Carolina?
Yes, your professional corporation can have more than one office in different areas of South Carolina as long as it follows all state and federal regulations.
Can a professional corporation in South Carolina have employees who are not licensed professionals?
Yes, a professional corporation in South Carolina can have employees who are not licensed professionals, but they cannot be shareholders of the corporation.
Do I need to set up a board of directors for my professional corporation in South Carolina?
It’s not mandatory to set up a board of directors for a professional corporation in South Carolina. However, having a board can provide many benefits, such as increased transparency and better decision-making.
Can a professional corporation provide more than one professional service under one entity in South Carolina?
Yes, a professional corporation in South Carolina can provide more than one professional service under one entity as long as all services fall within the corporation’s licensed professional fields and comply with state and federal regulations.
How can I find out if my profession is eligible for a professional corporation in South Carolina?
You can check with the South Carolina State Licensing Board to find out if your profession is eligible for a professional corporation in South Carolina.
Do I need to purchase liability insurance for my professional corporation in South Carolina?
Yes, it’s important to purchase liability insurance for your professional corporation in South Carolina to protect against potential lawsuits and other legal issues.
Can international professionals form professional corporations in South Carolina?
Yes, international professionals who are licensed in South Carolina can form professional corporations in the state.
What are the tax obligations of a professional corporation in South Carolina?
The tax obligations of a professional corporation in South Carolina include paying federal income tax, state income tax, and any other applicable taxes based on the corporation’s income.
What are the annual reporting requirements for a professional corporation in South Carolina?
In South Carolina, a professional corporation must file an annual report with the Secretary of State and pay applicable fees.
Can a professional corporation in South Carolina have a trade name?
Yes, a professional corporation in South Carolina can have a trade name as long as it complies with state regulations and is registered with the Secretary of State.
Do professional corporations in South Carolina have perpetual existence?
Yes, professional corporations in South Carolina have perpetual existence unless they are voluntarily dissolved or dissolved by the state.
Can a professional corporation in South Carolina merge with another corporation?
Yes, a professional corporation in South Carolina can merge with another corporation as long as it follows state and federal regulations and a majority of the shareholders consent to the merger.
Can a professional corporation in South Carolina convert into a different entity type?
Yes, a professional corporation in South Carolina can convert into a different entity type as long as it follows state regulations and provides notice to shareholders and other interested parties.
Are professional corporations in South Carolina subject to other entity taxes, such as franchise taxes?
Yes, professional corporations in South Carolina are subject to corporate franchise taxes based on their net income and other factors.
Can a professional corporation in South Carolina issue stock to raise capital?
Yes, a professional corporation in South Carolina can issue stock to raise capital as long as all shareholders are licensed professionals in the corporation’s professional field.
How long does it take to dissolve a professional corporation in South Carolina?
In South Carolina, dissolving a professional corporation typically takes four to six weeks once all necessary paperwork has been filed and processed with the state.
How do I dissolve a professional corporation in South Carolina?
To dissolve a professional corporation in South Carolina, you must file a Certificate of Dissolution with the Secretary of State and settle all outstanding debts and legal obligations.
Can a dissolved professional corporation in South Carolina be reinstated?
Yes, a dissolved professional corporation in South Carolina can be reinstated if all outstanding debts and legal obligations are settled, and the proper paperwork is filed with the state.
What is a professional corporation?
A professional corporation is a type of corporation where the owners are licensed professionals who practice in a specific field, such as law, medicine, or accounting.
Can I form a professional corporation in South Carolina?
Yes, you can form a professional corporation in South Carolina.
What are the requirements for forming a professional corporation in South Carolina?
The requirements for forming a professional corporation in South Carolina include obtaining a certificate of authority from the South Carolina Secretary of State and filing Articles of Incorporation with the Secretary of State.
Do I need to have a registered agent in South Carolina to form a professional corporation?
Yes, you must have a registered agent located in South Carolina to form a professional corporation in the state.
Can an out-of-state professional corporation do business in South Carolina?
Yes, an out-of-state professional corporation can do business in South Carolina, but it will need to register with the South Carolina Secretary of State and obtain a certificate of authority.
What is a certificate of authority in South Carolina?
A certificate of authority in South Carolina is a document that allows a professional corporation to do business in the state.
How do I obtain a certificate of authority in South Carolina?
To obtain a certificate of authority in South Carolina, you must file an application with the Secretary of State.
Are there any specific requirements for professionals to form a professional corporation in South Carolina?
Yes, there are specific requirements for professionals to form a professional corporation in South Carolina. Each professional must be licensed to practice in South Carolina, and the corporation must be comprised solely of licensed professionals in the same field.
Can professionals from different fields form a professional corporation in South Carolina?
No, professionals from different fields cannot form a professional corporation in South Carolina. The corporation must be comprised solely of licensed professionals in the same field.
How many people do I need to start a professional corporation in South Carolina?
You need at least one licensed professional to start a professional corporation in South Carolina.
Can a professional corporation have non-professional shareholders in South Carolina?
No, a professional corporation cannot have non-professional shareholders in South Carolina.
What fees are associated with forming a professional corporation in South Carolina?
The fees associated with forming a professional corporation in South Carolina include a $25 fee for a certificate of authority and a $110 fee for filing Articles of Incorporation.
What is the turnaround time for filing Articles of Incorporation in South Carolina?
The turnaround time for filing Articles of Incorporation in South Carolina is generally three to five business days.
What are the ongoing compliance requirements for a professional corporation in South Carolina?
The ongoing compliance requirements for a professional corporation in South Carolina include filing an annual report with the Secretary of State and maintaining a registered agent in the state.
What is the annual reporting fee for a professional corporation in South Carolina?
The annual reporting fee for a professional corporation in South Carolina is $25.
What happens if a professional corporation doesn’t file its annual report in South Carolina?
If a professional corporation doesn’t file its annual report in South Carolina, it may be subject to administrative dissolution.
Are there any tax benefits to forming a professional corporation in South Carolina?
There may be tax benefits to forming a professional corporation in South Carolina, such as being able to deduct certain business expenses from your taxes.
Can a professional corporation protect personal assets in South Carolina?
Yes, a professional corporation can protect personal assets in South Carolina by shielding the owners’ personal assets from business liabilities.
Can a professional corporation have a trade name in South Carolina?
Yes, a professional corporation can have a trade name in South Carolina, but it must still contain the word “corporation,” “incorporated,” or “professional corporation” in its name.
Can a professional corporation be classified as an S corporation in South Carolina?
Yes, a professional corporation can elect to be classified as an S corporation in South Carolina, but it must meet certain requirements and meets South Carolina law governing this issue.
Can a professional corporation have multiple license holders in South Carolina?
Yes, a professional corporation can have multiple license holders in South Carolina as long as they are all licensed in the same professional field.
Can a non-resident own a professional corporation in South Carolina?
Yes, a non-resident can own a professional corporation in South Carolina as long as they are a licensed professional in that same professional field.
Can a professional corporation own property in South Carolina?
Yes, a professional corporation can own property in South Carolina.
How do I register my professional corporation for taxes in South Carolina?
To register your professional corporation for taxes in South Carolina, you must obtain a federal Employer Identification Number (EIN) and register with the South Carolina Department of Revenue.
Is it mandatory to have liability insurance for a professional corporation in South Carolina?
It is not mandatory to have liability insurance for a professional corporation in South Carolina, but it is highly recommended to reduce liability risks.
Where can I find more information about professional corporations in South Carolina?
You can find more information about professional corporations in South Carolina by visiting the South Carolina Secretary of State’s website.
What is the physical address of the South Carolina Secretary of State’s office?
The physical address of the South Carolina Secretary of State’s Office is 1205 Pendleton Street, Suite 525, Columbia, SC.

Also Read

How to Save Money While Forming South Carolina Professional Corporation

One of the first steps in forming a professional corporation is choosing a business name. While you may be tempted to opt for a more extravagant or unique name, selecting a simpler name can actually save you money. Complicated names can lead to potential trademark issues, requiring you to spend additional funds to address legal conflicts. By choosing a straightforward name for your professional corporation, you can avoid unnecessary legal fees and protect your business from potential conflicts down the road.

Another way to save money while forming a professional corporation is to handle the paperwork yourself. While hiring a lawyer or professional service to assist with the necessary documents may seem like a time-saving solution, it can also be costly. With the resources available online, such as templates and guides provided by the South Carolina Secretary of State, you can complete the paperwork required for your corporation without the need for additional assistance. By taking the time to educate yourself on the process and requirements, you can eliminate unnecessary expenses and ensure that your corporation is properly established.

Additionally, consider forming a professional corporation as a Limited Liability Company (LLC) to reduce costs. LLCs offer the benefit of limited liability protection for your personal assets while also providing flexibility in terms of management structure and tax treatment. By forming your professional corporation as an LLC, you can avoid the fees and administrative requirements associated with a traditional corporation without compromising on legal protections.

When it comes to choosing a registered agent for your professional corporation, opt for a reliable and cost-effective service. While it may be tempting to go with the first provider you come across, take the time to research different options to find one that offers competitive rates and quality service. By selecting a registered agent that meets your needs without breaking the bank, you can save money on annual fees and ensure that your corporation remains compliant with state requirements.

In conclusion, forming a professional corporation in South Carolina doesn’t have to break the bank. By following these money-saving tips, you can establish your corporation without overspending. From selecting a simple business name to handling the paperwork yourself, there are plenty of ways to cut costs while ensuring that your business is set up for success. With a little planning and resourcefulness, you can save money during the formation process and focus on growing your professional corporation.

Conclusion

South Carolina Professional Corporation can offer several benefits for licensed professionals. However, it is essential to carefully consider the proper structure and compliance requirements before proceeding. Seeking professional guidance in forming a professional corporation can help ensure a smooth process and enable professionals to focus on providing their services. Visit LLCBase for more information about starting a professional corporation in South Carolina.

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