Starting a Business in South Carolina
South Carolina is consistently ranked as one of the top pro-business states by many different organizations. Since the recession of 2008, the state has been gradually growing in a positive direction. There are many reasons for this such as a labor market that is steadily expanding, a low cost of doing business and low tax burden (some business licensing can be complex), access to funding, and a common sense regulatory ecosystem. This has all led to consistent growth in the economy. It is no wonder that more and more start-ups are forming in South Carolina. If you are trying to grow your business, there are many incentive programs which are available in the form of tax credits, business grants and loans, and Sales Tax Exemptions.
STEPS TO STARTING A BUSINESS IN SOUTH CAROLINAThe South Carolina Department of Revenue collects taxes. All South Carolina businesses are responsible to collect sales taxes on products and taxable services. The South Carolina Secretary of State is where you form a business entity within the state. Once you have done a corporation search and selected a name for your business, you would establish a company with the South Carolina Secretary of State. After that you could apply for a Tax ID Number and register online for a South Carolina Retail License (Seller’s Permit). There are some other activities you can perform like searching for a specific South Carolina sales tax rate to file a South Carolina sales tax return. Afterwards you would be able to index form SCDOR-111 and research how to get the proper Business Licenses. The last process you would want to undertake is to look at the various benefits that are available for your company. Here are some of the incentives programs offered to qualified South Carolina businesses:
- The Corporate Headquarters Tax Credit is available to companies that form or expand their corporate headquarters to South Carolina. A company has two options for taking the tax credits. The first is a credit for the first 5 years of a lease on the corporate facility and the second option is a credit equal to 20% of the cost of the corporate facility. The incentive is also available in the form of a Sales and Use Tax Exemption. At least 20 new jobs must be created to qualify for the credit. To be eligible, a company must fill 40 jobs at the corporate facility with 20 of them being full time staff positions. Credits can be claimed for up to 10 years.
- South Carolina provides incentives through its Enterprise Zone Retraining Program. Companies that are located in designated industry zones qualify for a credit to retrain their existing workforce as long as the employees have been there for a minimum of 2 years. The credit is equal to 50% of the retraining expenditures with a maximum annual allowance of $1000 per worker.
- South Carolina Sales and Use Tax Exemptions are given to companies that have a qualified data center. A company must invest $50,000,000 and create at least 25 new jobs paying at least 1.5 times the states average annual average wage. Sales Tax Exemptions are given to any data center computer hardware and software related equipment as well as the electric used to power everything.
- The State also offers additional Sales and Use Tax Exemptions to companies that are in certain industries or situations. A qualified company that wants to build a new facility or upgrade an existing facility qualifies for Sales Tax Exemptions. They are given for equipment and machinery as well as the electricity that is used in building a new structure or expanding an existing one. Certain industries qualify for Sales and Use Tax Exemptions which include research & development, transportation and manufacturing businesses, and fuel manufacturers.
- There are workforce expansion programs in South Carolina designed to help a business with the fulfillment of quality jobs. The two most well-known programs are the Jobs Development Program and the Job Tax Credit.
- The Job Development Program is a rebate incentive that is offered to employers that create at least 25 jobs that exceed the average annual wage for the state. The refund is taken off of payroll taxes withheld for a 10-15 year period. The refund amount given is based on the amount the employee is paid as well as the physical location of the business.
- The Job Tax Credit is a corporate income tax credit offered to businesses that create new jobs. It can be taken as a direct credit against income tax up to 50 %. Similar to the job development credit, at least 10 new jobs must be created to qualify for the credit. Credits range from $1500-$25,000 per year for each new job created depending on the location of the company.