The South Carolina Secretary of State handles entity formation. The IRS handles federal tax classification via Form 8832 and Form 2553. The SC Department of Revenue administers state income tax and the corporate license fee. A South Carolina LLC can elect to be taxed as an S corporation for federal purposes. South Carolina LLC basics. - Articles of Organization filed with the SC Secretary of State. Online filing fee is $110 ($125 by mail). - South Carolina does not impose a franchise tax on LLCs. Most LLCs do not file an annual report with the Secretary of State. Only LLCs that have elected S corporation treatment (or are taxed as corporations) file the CL-1 with their SC tax return. - Single-member LLCs default to disregarded entity for federal tax. Multi-member LLCs default to partnership tax. Either can elect S corp treatment with Form 2553. - SC personal income tax is progressive; the top individual rate is adjusted periodically by the legislature. Pass-through income from an LLC flows to the owner's SC individual return. South Carolina S corp basics. - Federal S corp status flows through to SC for income tax purposes. The S corp files the SC 1120S state income tax return. - LLCs or corporations electing S corp treatment must file the CL-1 Initial Annual Report with the SC Department of Revenue, with a $25 filing fee. - The SC corporate license fee applies to corporations and to LLCs taxed as corporations. The minimum fee is $25 plus $15 for the initial filing, with the amount scaling with the entity's SC-apportioned capital stock and paid-in surplus under S.C. Code Title 12, Chapter 20. - S corp election has no state-level benefit in SC separate from the federal self-employment tax savings. Payroll on a reasonable owner-employee salary is subject to federal FICA and to SC state unemployment insurance through the SC Department of Employment and Workforce once the wage threshold is met. Why a South Carolina trades shop might still elect S corp. The main reason is federal self-employment tax savings. A disregarded-entity LLC owner pays self-employment tax on the full net profit. An S corp owner-employee pays payroll tax on wages only; the distribution portion avoids self-employment tax. South Carolina's corporate license fee is modest for most small trades operations, so the S corp election is usually a federal decision with minor SC-side friction (the CL-1 filing and license fee). Rule of thumb. Start as a South Carolina LLC. When annual profit after a reasonable owner wage is high enough that payroll-tax savings clear payroll, retirement plan, and accounting costs, elect S corp. A CPA with South Carolina construction clients can run the breakeven for your numbers and confirm the current corporate license fee calculation.
SC · LLC vs S-Corp
LLC vs S-Corp in South Carolina
Entity formation, tax treatment, and when to switch.
Not legal, financial, or career advice. Trades Navigator compiles state board rules, statutes, and federal data into a navigable layer linked to primary sources. We do not maintain editorial attestation on each line. Always verify the specific number, fee, deadline, or rule against the linked primary source before relying on it. Confirm any decision with the relevant state agency, a lawyer, or an accountant.
Correction-report email coming soon.