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How To Start a Nonprofit in South Carolina

Starting a nonprofit in South Carolina involves many of the same steps as opening a for-profit business. But forming a nonprofit comes with unique legal considerations, like charitable organization registration, incorporation, and applying for tax-exempt status.

If you're thinking about starting a small business with a religious, charitable, scientific, literary, or educational purpose, your organization may be eligible for tax exemptions under state and federal law. But the process takes considerable time and effort, and you must meet specific requirements.

This article outlines the various steps to start a nonprofit corporation in South Carolina. Learn about the state-specific forms, processes, and laws you'll interact with while launching your charitable organization.

Also, see FindLaw's Nonprofit Organizations section for additional information and resources.

Form your nonprofit with confidence. Our trusted partner LegalZoom has packages starting at $99 + filing fees.

Steps To Start a South Carolina Nonprofit

To get and maintain tax-exempt status for your organization, you'll need to understand the initial requirements and ongoing obligations.

Step 1: Choose a Name for the Nonprofit

Naming your nonprofit is a significant part of your business formation. Your business name is an essential part of your brand. The name you choose should clearly convey your organization's mission and goals. A confusing or misleading business name can hinder your ability to communicate your organization's purpose to your audience.

South Carolina has guidelines regarding business names. Your organization's name must be distinguishable from other business names on record in the state. Your name also can't violate South Carolina law or your organization's articles of incorporation.

Search state business records to determine if the name you want is distinguishable from other business names in South Carolina. If another business entity already uses the name you'd like for your organization, choose a different name and make sure it's available.

You will also want to do a national United States Patent and Trademark Office (USPTO) search for your business name. If anyone else has that name federally trademarked, then you shouldn't use it. If you do, and they learn of it, then they can sue you and force you to stop.

Once you've selected a business name, you can secure the domain for your website and social media user names on Facebook and Instagram.

Step 2: Select a Board of Directors and Officers

There is a corporate structure you must abide by to meet the requirements of a nonprofit corporation. Directors have the power and authority to govern the organization. Officers have specific responsibilities in day-to-day operations.

You'll need to appoint the following roles in your organization:

  • At least three directors
  • President
  • Treasurer
  • Secretary

There are a few things to consider as you select your board members:

  • The three or more directors you choose must be unrelated by marriage or blood
  • There is no requirement that the directors you choose all reside in South Carolina
  • Your officers (president, treasurer, and secretary) can hold more than one office within your organization. You may want to combine the treasurer/secretary position. But it may be best to keep the president and secretary roles held by separate people

Step 3: Select a Registered Agent

You'll need to appoint a registered agent to receive legal papers. Think of your registered agent as your organization's official legal point of contact. For example, if someone sues your business, the registered agent would be the person or company responsible for accepting legal documents.

The registered agent you choose must have a physical street address in South Carolina. They should be available to sign for documents during regular business hours. You can't use a post office box.

If you can't find a qualified person to serve as your registered agent, you can use a registered agent service. The nonprofit's lawyer is a typical agent choice. But be sure to ask them before designating them as agent.

Step 4: File Articles of Incorporation

You will need to file articles of incorporation to form your nonprofit corporation. The information you submit to the South Carolina Secretary of State must satisfy state requirements in addition to federal requirements for tax-exempt status.

Under 501(c)(3) of the Internal Revenue Code, the Internal Revenue Service (IRS) will consider a corporation for exemption from federal income tax if it's organized and operated for one of the following purposes:

  • Religious
  • Charitable
  • Scientific
  • Literary
  • Educational
  • Testing for public safety
  • Amateur sports competitions
  • Prevention of cruelty to animals or children

If you plan to apply for tax-exempt status, consider the IRS requirements as you prepare your articles of incorporation. Your articles of incorporation must clearly state that your nonprofit operates for an exempt purpose. If not, the IRS will likely deny your tax-exempt status application.

Also, your articles of incorporation should include a statement addressing how your organization will distribute its assets in the event of dissolution, or closing down. This statement is vital because you must allocate the assets of your 501(c)(3) organization to another exempt purpose.

You can submit your articles of incorporation by mail or online. To submit by mail, complete the Articles of Incorporation Section 33-31-202 form and attach the 501(c)(3) attachment. This attachment is necessary for filers who want to be eligible for federal and state tax exemptions. Add in the filing fee of $25 and mail to:

Secretary of State, Attn: Corporate Filings, 1205 Pendleton Street Suite 525, Columbia, SC 29201

Step 5: Prepare Bylaws and Policies

Your nonprofit corporation must have bylaws and a conflict of interest policy. The bylaws are the rules and procedures that govern the organization. They're an essential foundation for your organization, even though you don't file them with the state.

Be prepared to refer to your bylaws as your organization grows. They will help you with various business events, like electing officers.

The policies you should adopt for your organization depend on the nature of your nonprofit and how you conduct business. But you must include a conflict of interest policy. This policy ensures your organization's members make decisions based on the organization's interests, not on their self-interest or personal gain.

Step 6: Hold Initial Meeting

You'll need to hold the first meeting of your board of directors to accomplish essential business matters. Typical matters for discussion at the initial meeting include:

  • Adoption of bylaws
  • Adoption of policies (such as the conflict of interest policy)
  • Selection of officers
  • Opening of corporate bank account

Don't forget to take detailed minutes (notes) of the initial organizational meeting. You'll need to reference these minutes to see what your board members accomplished.

Step 7: Get a Federal EIN

An EIN (Employer Identification Number) or Tax ID number is like a social security number for your business. It identifies your corporation for tax purposes, and you'll need it to open a business bank account and hire employees. Getting an EIN is easy and free. Apply online through the IRS website.

Watch out for commercial sites charging a fee for an EIN. Many of them look similar to the official IRS website.

Step 8: Get a State Tax Identification Number

You'll also need a state tax identification number from the South Carolina Department of Revenue.

Complete the Business Tax Application (Form SCTC-111) to get a South Carolina tax ID number for your organization. You can submit this form online or submit by mail to:

South Carolina Department of Revenue, Registration PO Box 125, Columbia, SC 29214-0850

Step 9: Apply for Federal Tax Exemption

There are different types of nonprofits referenced under Internal Revenue Code Section 501. The most common type of nonprofit is the 501(c)(3) organization. Because these charitable organizations focus on the public interest, the IRS allows benefits like exemption from federal income taxes. But you must apply for and be approved for this exemption.

Before starting the application process, make sure you've satisfied the following IRS requirements:

  • Registered nonprofit corporation
  • Selected at least three directors for the nonprofit corporation
  • Issued an EIN from the IRS
  • Adopted bylaws and conflict of interest policy

When you're ready to apply for federal tax exemption, go to the IRS website and select the appropriate form for your organization. You'll need either IRS Form 1023 or IRS Form 1023-EZ to apply for exemption as a 501(c)(3) organization, depending on the expected donation amount and size of your organization. Smaller organizations can use the IRS Form 1023-EZ, which is shorter.

The cost of your application for federal tax exemption depends on the form you use. The IRS Form 1023 application costs $600, and the IRS Form 1023-EZ application costs $275.

If the IRS approves your application, you will receive a determination letter.

Step 10: Send Your Determination Letter to the State

Once the IRS approves your organization for federal tax exemption, you're automatically exempt from state income tax in South Carolina. Send a copy of your IRS determination letter to the South Carolina Department of Revenue.

Step 11: Register as a Charitable Organization

You'll also need to register as a charitable organization if you plan to engage in charitable solicitation or hold fundraisers for your organization. You can apply online with the South Carolina Secretary of State Division of Public Charities. You must renew this registration annually.

Donors and philanthropists can search for registered charitable organizations on the Secretary of State website. Potential patrons often use this tool to ensure a nonprofit or charity is in good standing before donating money. The Secretary of State website also publishes a list of suspended charitable organizations.

What Do I Need To Do After Forming a South Carolina Nonprofit?

If you haven't already formed a plan for hiring, you should work on this once you've established your nonprofit corporation. As your organization grows, you may need to hire staff to keep up with daily operations and fulfill your nonprofit's mission. You'll likely need unemployment insurance and worker's compensation.

Don't forget to look into business insurance and local licensing and permit guidelines.

Check zoning requirements if your nonprofit operates out of a brick-and-mortar location.

You have annual obligations to maintain your 501(c)(3) tax-exempt status and remain in good standing with the state:

  • File IRS Form 990 annually
  • File SC corporate income tax returns annually (Form SC 990-T)
  • Renew charitable solicitation registration annually

South Carolina doesn't require nonprofits to file an annual report.

Resources for SC Nonprofit Business Owners

South Carolina Business One Stop provides information and resources to South Carolina business owners. Find help with your startup, operating your business, business license requirements, and more.

There are 18 Small Business Development Center (SBDC) regional offices throughout South Carolina. Visit a location near you for free help from expert business consultants.

Together SC (an affiliate of the National Council of Nonprofits) aims to strengthen, unite, and advance SC nonprofits. Entrepreneurs with a community-focused, charitable mindset can find resources and support for starting and maintaining a nonprofit.

Need More Help With Your Nonprofit? Talk to an Attorney

You will have to make several critical decisions when starting your nonprofit. You'll want to take the time, effort, and research to ensure you're making the right moves. You may benefit from getting legal help. An attorney familiar with both federal and South Carolina laws can help ease this process by tackling the legal aspects for you.

Contact a business attorney in your area today to discuss how a lawyer can help with your nonprofit formation.

Another option is to use our trusted, simple-to-use online business formation tool. This tool takes the guesswork out of starting your nonprofit. It guides you through the various formation steps and helps you meet the necessary legal requirements.

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