How to Incorporate in SC: Everything You Need to Know
Wondering how to incorporate in SC? Incorporation is the legal procedure for forming a corporation.4 min read
2. Write the Articles of Incorporation
3. Assign a Registered Agent
4. Prepare Your Corporation's Book of Records
5. Write the Bylaws of Your Corporation
6. Assign the First Incorporators
7. Hold the First Board Meeting of the Directors
8. Issue Stocks to Shareholders
9. Comply With the Tax Requirements
10. Register a Foreign Corporation
Wondering how to incorporate in SC? Incorporation is the legal procedure for forming a corporation. The company becomes a separate and distinct entity from the shareholders once it becomes a corporation. Here are the basic steps:
- Pick a name.
- Draft Articles of Incorporation.
- Assign a registered agent.
- Prepare a book of records
- Write the bylaws.
- Assign the first incorporators.
- Hold a Board of Directors meeting.
- Issue stock.
- Comply with tax requirements.
Pick a Name for Your Corporation
The name of your corporation must include one of these words: LLC, Company, Corporation, or Incorporated. It's important to come up with a distinguishable corporation name that is not yet registered at the South Carolina Secretary of State. Check with their database if a name is still available. If it is, you can reserve it for 120 days by filling up the form Application to Reserve Name. Pay $10 for the filing fee and send the form via mail.
Write the Articles of Incorporation
The articles must cover the following information:
- The corporation's name and address.
- The agent's name, address, signature, and service process.
- The corporation's nature of business.
- The number of shares that your corporation is allowed to issue.
- The incorporators' name and address.
- The date of the articles.
Corporations are legally formed by filing these articles together with the CL-1 Form.
Assign a Registered Agent
Corporations in South Carolina must have an agent for service of process in the state. The agent's role is to share in the legal documents in the case the corporation gets sued. This agent must be a registered business with a physical address in South Carolina. You can only designate agents that agree to accept service of process on behalf of your corporation.
Prepare Your Corporation's Book of Records
Corporations in South Carolina are legally required to keep a book of records. All of the important papers of your corporation must be kept for auditing. This includes minutes of any meetings between the director and the shareholders, stock certificates, and stubs. The book of records must be kept safe at the corporation's headquarter office. Order your customized three-ring records binder from a supplier of corporate kits.
Write the Bylaws of Your Corporation
You have to set up the basic rules for operating your corporation. These rules are called bylaws and are recorded in an internal corporate document. Although these are not a legal requirement, the benefits are tremendous for your business.
- Standardize the operating rules of your corporation so that confusion is avoided among the shareholders.
- Legitimize your corporation in the eyes of IRS, banks, creditors, and other financial institutions.
Suppliers of corporate kits can give you samples of bylaws.
Assign the First Incorporators
You need an initial corporate director who will sign the articles. The appointed incorporator shall take charge on the board until the first board members are voted by the shareholders. He must sign a Statement of Incorporator form where his name and address are indicated. The signed statement must be filed in the state and must be kept in the corporate's book of records.
Hold the First Board Meeting of the Directors
The purpose of the first meeting is to:
- Appoint officers.
- Draw bylaws.
- Authorize the issuance of stocks.
- Choose a corporate bank.
- Adopt the corporation's official seal.
- Create the official stock certificate form.
- Set the fiscal year.
Every action of the directors must be recorded in the corporate record book. The minutes of the meeting must be prepared and sent out to the directors for their signatures.
Issue Stocks to Shareholders
Paper stock certificates are not legally required to be issued to shareholders. However, it's a good practice, especially for small corporations. The certificate must include the shareholder's name, address, and contact details. Sale or share of stocks is regulated by the federal securities laws.
Comply With the Tax Requirements
Make sure that your corporation is compliant with the tax and other regulatory requirements.
- EIN (Employer's Identification Number). Fill out the application form on the IRS website.
- S Corporation Filing. Fill out Form 2553 if you would like S corporation status.
- Business Licenses. Depending on the nature of the business, your corporation may need to obtain local permits and pay the license fee of $15 for every $1,000 of capital stock.
Register a Foreign Corporation
If your corporation is formed outside of South Carolina, you have to register it with the South Carolina Secretary of State in order to operate locally. Pay the $135 filing fee and submit the Application for a Certificate of Authority to Transact Business with the South Carolina Secretary of State.
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