How to Start a Nonprofit in South Carolina: Articles, 501(c)(3) and Charity Registration

Starting a nonprofit in South Carolina means clearing three separate approvals, and each one comes from a different agency. First, the Secretary of State creates the corporation when you file Articles of Incorporation. Second, the IRS decides whether the organization is tax exempt, usually as a 501(c)(3). Third, the Secretary of State's Public Charities Division decides whether you must register before you ask anyone for money. Finishing one does not finish the others. This guide covers all three in the order most founders should handle them.

Disclaimer: This article is informational content, not legal or tax advice. Nonprofit formation involves governance, tax, and fundraising rules that depend on your specific facts. Talk with a qualified attorney and a CPA before you file, especially if you plan to hire staff, own property, or solicit donations in more than one state.

Fees at a Glance

Item	Cost	Who handles it
Articles of Incorporation (nonprofit corporation)	$25 (S.C. Code Section 33-31-122)	SC Secretary of State, Business Entities Online
Name reservation (optional)	$10, holds the name for 120 days, nonrenewable	SC Secretary of State
Charitable solicitation registration	$50 per year (S.C. Code Section 33-56-30)	SC Secretary of State, Public Charities Division
Annual exemption request (if you qualify for an exemption)	Free	SC Secretary of State, Public Charities Division
IRS Form 1023 or 1023-EZ	IRS user fee. Confirm the current amount on IRS.gov.	Internal Revenue Service
Retail License (only if you sell tangible goods)	$50 one time per location, nonrefundable	SC Department of Revenue (SCDOR)
Local business license tax (only on unrelated or for-profit income)	Varies. Confirm with your city or county.	Local government

What You Will Need Before You Start

• A proposed corporate name that does not match an existing entity on file
• A written purpose statement describing your charitable, educational, religious, or similar goals
• The names and addresses of your incorporators and your initial board of directors
• A street address for the registered office, plus the name of your registered agent, as the articles form requires
• Draft bylaws
• A federal Employer Identification Number (EIN) from the IRS
• A bank account in the corporation's name and a bookkeeping system kept separate from your personal finances
• Your budget for the first year, including fees, insurance, and any planned fundraising costs

Step 1: Choose Your Corporation Type

South Carolina lets you form a public benefit, mutual benefit, or religious nonprofit corporation. A public benefit corporation serves the public, such as a charity, school, food bank, or arts group. A mutual benefit corporation serves its members, such as a neighborhood association, social club, or trade group. A religious corporation serves a church or other religious body. Charities that plan to seek 501(c)(3) status normally choose public benefit. Because the type shapes your articles, make the choice deliberately and confirm it with your attorney.

Write a purpose clause that says what the organization does in plain language. Vague wording such as "help the community" tends to draw follow-up questions from the IRS. Specific wording, such as "provide literacy tutoring for adults in Richland County," gives reviewers a clear picture of your work.

Step 2: Check and Reserve Your Name

Search the Secretary of State's business records at businessfilings.sc.gov before you choose a name. The state checks new names against existing filings, so a name that is already in use will be rejected. If you need time to line up your board and bank account, you can reserve the name for 120 days for $10. The reservation cannot be renewed, so file the articles before it expires. Reservation forms are available from the Secretary of State's forms page.

Step 3: Draft Bylaws and Hold an Organizational Meeting

Bylaws are the internal rulebook for your organization. They cover how many directors you have, how they are elected, how officers are chosen, how meetings and votes work, how conflicts of interest are handled, and how spending is approved. The articles are public. The bylaws are internal, but they should match the articles, and the IRS application asks for copies of your governing documents.

Hold an organizational meeting, even a short one, to adopt the bylaws, elect officers, authorize the EIN application, and approve opening a bank account. Keep signed minutes. Those minutes show that a board runs the organization, not one person acting alone, and that record matters if the IRS or a funder asks questions later.

Step 4: File the Articles of Incorporation

File online through Business Entities Online. The filing fee is $25 under S.C. Code Section 33-31-122. The portal reports that documents filed online through Business Entities Online are returned within 24 to 48 business hours. Mailed and in-person filings take longer, and the Secretary of State does not publish a turnaround window for them. Confirm the current timing for nonprofit filings before you schedule a grant application or event around the date.

Your articles will list the corporation's name, its type, its purpose, the registered office and agent, the incorporators, and a dissolution clause. South Carolina requires that the assets of a dissolved nonprofit pass to another nonprofit. Include that language in the articles, because IRS guidance expects the same provision for 501(c)(3) status.

Filing makes the corporation legal. It does not make the corporation tax exempt, and it does not authorize you to solicit donations.

Step 5: Get an EIN and Open a Bank Account

Apply for an Employer Identification Number directly on the IRS website. The EIN is free to obtain, and you will need it for your bank account, your IRS exemption application, and most payroll and grant paperwork. Open the account in the corporation's name, using the articles and the board resolution from your organizational meeting. Do not run organization money through personal accounts. Commingled funds are one of the most common reasons nonprofits lose credibility with funders and examiners.

Step 6: Apply for 501(c)(3) Status With the IRS

Federal tax exemption is separate from state formation. Most charities apply on IRS Form 1023, the full application, or on Form 1023-EZ, a shorter form for smaller organizations that meet IRS eligibility limits. Review the IRS eligibility requirements for Form 1023-EZ before you choose it, because an ineligible organization that files the short form may have to start over. Confirm the current user fee on IRS.gov, since the fee is not listed in this guide.

When the IRS issues your determination letter, keep the original in a safe place. You will need it for the state exemption request, for grant applications, and for donors who ask whether their gifts are tax deductible. Your CPA can explain how the effective date of your exemption works, especially if you began operating before the IRS acted.

Step 7: Register or Claim an Exemption for Charitable Solicitation

The rule to remember is simple: register before you solicit. Register with the Secretary of State's Public Charities Division before you ask anyone for contributions, and pay the $50 annual fee under S.C. Code Section 33-56-30. Renew it every year. Ask the Division how it treats your planned methods, such as online appeals, event tickets, sponsorships, and crowdfunding, because the answer can affect whether you need to register.

Some organizations do not have to register under S.C. Code Section 33-56-50. These include:

• Charities that raise $7,500 or less a year
• Charities that raise $20,000 or less a year, have an IRS exemption letter, and pay no one more than $500
• Schools soliciting their own constituencies
• Membership-only groups

Even exempt organizations must file a free annual exemption request. The thresholds apply each year and depend on your actual receipts, so the exemption is not a one-time test. Confirm how the Division counts gifts, grants, and event income before you rely on it. If you are close to a threshold, register rather than guess.

Step 8: Handle Sales Tax and Local Licenses

Sales tax. The South Carolina state sales tax rate is 6%. Nonprofits receive some sales tax exemptions, but they are narrow. Do not assume a purchase is exempt because your organization is a charity. Ask the SCDOR at dor.sc.gov before you make large purchases or set up a store.

Retail License. If you sell tangible goods, such as merchandise or donated items in a thrift store, you generally need a Retail License from the SCDOR. The license is a one-time, nonrefundable $50 fee per location. Apply through the Business Tax Application on MyDORWAY, as described on the SCDOR licensing page. Ask the SCDOR whether a specific one-time event, such as a bake sale, requires the license.

Local business license. South Carolina has no general statewide business license, and Secretary of State registration is not a business license. Charities are exempt from local business license tax, except on unrelated or for-profit income under S.C. Code Section 6-1-400 (Act 176). If your organization earns that kind of income, your city or county may tax it. Most cities levy a business license tax, and nine counties do as well: Beaufort, Charleston, Dorchester, Horry, Jasper, Marion, Orangeburg, Richland, and Sumter. Every licensing city and county runs a May 1 to April 30 license year, with payment due April 30. Renewals are handled at localblrenewal.com. Confirm the rules with the city or county where the activity takes place.

Step 9: Stay Compliant After Formation

Formation is the start of your compliance work, not the end. Each year, hold your board meeting, keep signed minutes, renew your solicitation registration or file your exemption request, and file the annual information return the IRS requires of exempt organizations. Which return applies depends on your size and receipts, so confirm it with your CPA. Ask the SCDOR and your CPA whether any state income tax filing applies to your organization. Keep donation receipts, grant agreements, and board records together in one place.

What to Expect Once You Are Set Up

Organizations that complete these steps in order should have a legal corporation, a bank account, and a documented governance process. They may also be positioned to receive grants and tax-deductible gifts once the IRS issues its determination letter. Results depend on how complete and accurate your filings are, and the IRS does not commit to a fixed timeline for its review. Plan your launch around the date of your IRS letter, not the date of your state filing, and avoid making promises to donors about deductibility before you have that letter in hand.

Common Mistakes to Avoid

• Soliciting before registration or exemption. Asking for money online, at events, or by mail before you register or confirm an exemption is the fastest way to create a state compliance problem.
• Treating state approval as tax exemption. The Secretary of State's filing creates the corporation. Only the IRS grants 501(c)(3) status.
• Vague purpose language. Broad statements make it harder to show charitable purpose and can prompt IRS questions.
• Leaving out the dissolution clause. South Carolina requires dissolved assets to pass to another nonprofit, so the articles should reflect that.
• Mixing personal and organization money. Pay expenses from the organization's account, and document any reimbursements to founders.
• Paying insiders without a process. Compensation decisions should be approved by the board and recorded in the minutes.
• Assuming charities never owe local tax. Unrelated or for-profit income can trigger local business license tax.
• Assuming a sales tax exemption applies everywhere. Confirm each purchase and sale with the SCDOR.

Tips From Filers Who Have Done This

• Reserve the name only if you need the time. Otherwise, file the articles as soon as your board and purpose statement are ready.
• Ask your IRS application questions early. Gathering financial projections before you start the form saves rework.
• Set calendar reminders for the $50 registration renewal, your annual exemption request, and your local license deadlines.
• Use free advising. The South Carolina Small Business Development Centers offer help with formation and planning.
• Keep a single file of formation documents, including the articles, bylaws, minutes, EIN letter, and IRS determination letter.

Official Resources

• SC Secretary of State, Business Entities Online: sos.sc.gov/online-filings/business-entities
• SC Secretary of State business records search: businessfilings.sc.gov
• SC Department of Revenue: dor.sc.gov
• SC Small Business Development Centers: scsbdc.com
• SBA resources for South Carolina: sba.gov/district/south-carolina

Get Professional Help for Complex Situations

A simple community group with one board and one bank account can often handle formation with careful reading and the steps above. Organizations that plan to hire staff, own real estate, run a store, accept grants from several states, or operate a membership program with paid benefits should talk with an attorney and a CPA before filing. A few hours of professional review at the start costs far less than correcting a governance or tax problem after the IRS has questions.

Reminder: This article is informational only and is not legal or tax advice. Confirm current fees, deadlines, and eligibility rules with the agency that administers them before you act.