South Carolina Tax ID (EIN) Number & Business Registration
Looking to register a Tax ID Number and/or start a business in South Carolina? You can do both online, simply follow the steps below. Let's start with an overview of the business climate in South Carolina. With major cities like Columbia, Charleston, and Mt. Pleasant, South Carolina is home to multiple major business hubs. South Carolina's economic growth is on pace with the rest of the United States, with a growth rate of 2.3 percent. In South Carolina alone, there are more than 384,000 small businesses, which represent 96.9 percent of all businesses in the state. There are also more than 743,000 employees working for those small businesses, who collectively represent nearly half the South Carolina workforce. Needless to say, South Carolina's small business community is thriving.
Steps to Obtain a South Carolina Tax ID & Business Registration:
- Business Formation in South Carolina
- Obtain your Federal Tax ID (EIN) Number
- South Carolina State Tax ID Number
- South Carolina Licenses and Permits
When you have a great idea for a business, it's easy to get wrapped up in the novelty or potential of that idea. But if you want a good chance at becoming successful, you need to ground that idea with a solid framework, and structure that business appropriately. Your first step in this process will be writing a full business plan. This business "blueprint" will map out your strengths and weaknesses, and allow you to build a strategy that can take your business from startup territory to something truly formidable in today's competitive landscape.
During this process, you'll need to choose how you want to structure your business, since this decision will impact both your taxes and your personal liability.
If you're looking for liability protection, there's no better option than a corporation. Corporations are separate legal entities, which means you won't be taking on your business's debt, nor will you be held personally liable for most forms of corporate loss or wrongdoing. You can also use a corporation to raise capital through publicly issued shares. The flipside is that corporations are complicated to manage, and are responsible for paying their own taxes (which means any income you draw from the business could be doubly taxed). In South Carolina, you'll also be responsible for paying a 5 percent corporate income tax rate.
Limited liability companies (LLCs) are a bit simpler. They're still treated as distinct legal entities, but they're much simpler to create and manage. And in South Carolina, you won't be required to fill out an annual report or pay state taxes (for the most part—some LLCs may need to file taxes as a corporation). You'll still be responsible for sales taxes, employer taxes, and/or excise taxes, however. These companies are a good way to shield yourself from some liability, without making the full upgrade to corporation status.
Your other option is to start a sole proprietorship or partnership (which is basically a sole proprietorship, but with two or more people). You won't get any liability protection with this kind of company, which means you'll be fully exposed to liability issues, and any debts you take on through the business will be your own. However, you may not be subject to many (if any) additional taxes, so it's an advantageous move for many simple types of businesses.
After you've decided what type of business you want to create, you'll need to make things official by getting your federal Tax ID (EIN) Number. This will be a unique string of numbers attached to your business, almost like a social security number (SSN), which you'll use in dozens of different business functions.
For example, you'll need your EIN when applying for a new bank account or line of credit, and when hiring new employees. You may also need it for certain types of collaborations with other businesses, and you'll need it when filing taxes at the end of the year.
You can't get far in your business's creation until you have an EIN in place. If you want the task completed as quickly and efficiently as possible, your best course of action is to use a professional Tax ID Number Obtainment Service.
Almost every South Carolina business will also need a state tax ID number from South Carolina. While similar in nature to the federal tax ID, this number is used for a variety of state-level taxes and paperwork. For example, you'll need a South Carolina state tax ID to register for sales taxes and excise taxes. Without one, you may not be able to remain operational.
There's no statewide requirement for a general business license, but there are several towns and municipalities in South Carolina that require you to have a business license to operate. In addition, there are licensing and permit requirements for many specific types of businesses, including casinos, healthcare facilities, and bars. Before you get too far, it's important for you to research which licenses and permits are necessary, both on the state and local level. If you can, try talking to an owner of a business like yours, and get firsthand knowledge of the licenses they required.
At this point, you should have all the knowledge and direction you need to tackle the next steps of your entrepreneurial journey. If you don't have a business plan in place, you should take care of that first. Your next step should then be to get your Federal Tax ID (EIN) and your South Carolina State Tax ID.