To start a nonprofit in South Carolina, file articles of incorporation with the Secretary of State and pay a $25 filing fee. That single filing creates the legal entity, but a working tax-exempt charity needs more: bylaws, an EIN, a charitable solicitation registration, and a 501(c)(3) determination letter from the IRS. Doing the steps in the right order keeps you out of a back-and-forth with two different agencies.
Pick a Name and Line Up Your People
Your nonprofit’s name has to be distinguishable from every other corporation, limited partnership, and business entity already on file with the Secretary of State.1South Carolina Legislature. South Carolina Code Title 33 Chapter 31 – Section 33-31-401 Corporate Name Search the Secretary of State’s online business database first. If your name is too close to an existing entity, the state rejects the filing. Written consent from the other entity is technically allowed but almost never happens in practice. Pick something clearly distinct.
Before you draft anything, identify your initial directors. South Carolina requires at least three.2South Carolina Legislature. South Carolina Code Title 33 Chapter 31 – Section 33-31-803 Number of Directors They don’t have to live in the state, but they carry the legal responsibility for governing the organization.
You also need a registered agent with a physical street address in South Carolina to receive legal papers and government mail.3South Carolina Legislature. South Carolina Code Title 33 Chapter 31 – Section 33-31-501 Registered Office and Registered Agent This can be a director, another individual in the state, or a commercial service. Commercial agents typically run $100 to $300 per year.
Draft and File the Articles of Incorporation
Articles of incorporation are the founding document that creates your nonprofit under state law. The Secretary of State provides a standard form, and the filing must include the information required by the state nonprofit corporation act.4South Carolina Legislature. South Carolina Code Title 33 Chapter 31 – Section 33-31-202 Articles of Incorporation At minimum, include:
- The corporate name you verified as available.
- The registered agent’s name and street address.
- Names and addresses of the incorporators filing the document.
- A purpose statement describing the organization’s charitable goals.
- A dissolution clause directing what happens to remaining assets if the nonprofit closes.
You can add a duration period if the nonprofit is meant to exist for a set number of years. Most leave this out and exist perpetually until formally dissolved.
Getting the IRS Language Right the First Time
Your purpose statement does double duty: it satisfies the state and lays the groundwork for federal 501(c)(3) recognition. The IRS wants to see language limiting the organization exclusively to exempt purposes, and it publishes suggested wording in Publication 557. The standard version says the corporation is organized exclusively for charitable, religious, educational, or scientific purposes, including distributions to other 501(c)(3) organizations.5Internal Revenue Service. Suggested Language for Corporations and Associations per Publication 557 Include an operational clause too, stating the nonprofit won’t carry on activities not permitted for a 501(c)(3). Putting this in your articles up front avoids amending them later.
The dissolution clause has to send remaining assets to another tax-exempt organization or to a government entity for a public purpose.6Internal Revenue Service. Does the Organizing Document Contain the Dissolution Provision Required Under Section 501(c)(3) Without this language, the IRS will reject your exemption application. The IRS provides an acceptable version: “Upon the dissolution of this organization, assets shall be distributed for one or more exempt purposes within the meaning of IRC Section 501(c)(3), or shall be distributed to the federal government, or to a state or local government, for a public purpose.” Use that or something substantively identical.
Filing the Document
Submit the completed articles through the Secretary of State’s online portal or by mail. The filing fee is $25.7South Carolina Legislature. South Carolina Code Title 33 Chapter 31 – Section 33-31-122 Filing, Service, and Copying Fees Online filings take credit cards and typically process within a few business days. Mailed filings take longer.
Once accepted, you’ll receive a certified copy of the articles. Keep it permanently. You’ll need it to open a bank account, apply for grants, register for charitable solicitation, and file for federal tax-exempt status. The date the state approves the filing is your nonprofit’s official date of legal existence.
Complete the Post-Incorporation Setup
With the entity in place, several steps can run in parallel.
Adopt Bylaws
The incorporators or the initial board must adopt bylaws.8South Carolina Legislature. South Carolina Code Title 33 Chapter 31 – Section 33-31-206 Bylaws Bylaws are the internal rules covering meeting frequency, voting, officer roles, director elections and removal, and committees. They don’t get filed with the state, but keep them with your corporate records. The IRS will ask about them when you apply for exemption.
Get an EIN
Apply for an Employer Identification Number on the IRS website at no cost. You need it before opening a bank account, hiring staff, or filing any tax return. The online application produces an EIN immediately.
Adopt a Conflict of Interest Policy
The IRS expects 501(c)(3) applicants to have a conflict of interest policy. It requires directors and officers to disclose situations where personal interests might conflict with the organization’s, and to step out of voting on affected decisions.9Internal Revenue Service. Form 1023 Purpose of Conflict of Interest Policy Adopt this at the same organizational meeting where you approve bylaws.
Register for State Taxes
File Form SCDOR-111 with the South Carolina Department of Revenue to open a state tax account.10South Carolina Department of Revenue. Apply for a Business Tax Account This covers withholding tax if you have employees, sales tax, and other state obligations. File online or by mail.11South Carolina Department of Revenue. SCDOR-111 Instructions Corporations must register with the Secretary of State at least 30 days before submitting this application.
Register Before You Solicit Donations
If your nonprofit will ask the public for donations, register with the Secretary of State’s Public Charities Division before you begin.12South Carolina Legislature. South Carolina Code Title 33 Chapter 56 – Section 33-56-30 Registration Statement Filing Form Contents Fee Initial registration costs $50 and lasts one year.13South Carolina Legislature. South Carolina Code Title 33 Chapter 56 – Solicitation of Charitable Funds Act Renew annually with a financial report. First-time registrants submit their most recent financial report with the initial application.
This is the step people skip most often, and it creates real problems. Soliciting without registering violates the Solicitation of Charitable Funds Act, and the Secretary of State actively monitors compliance.
Apply for 501(c)(3) Recognition
Federal tax-exempt status is separate from state incorporation. Apply to the IRS by filing Form 1023 or the streamlined Form 1023-EZ. Both go through Pay.gov.
Which Form Fits
You qualify for Form 1023-EZ if annual gross receipts have not exceeded $50,000 in any of the past three years, you don’t project exceeding $50,000 in any of the next three years, and total assets are $250,000 or less.14Internal Revenue Service. Do You Have the Required Financial Information The IRS provides an eligibility worksheet that must be completed before filing the EZ version; a single disqualifying answer sends you to the full form.15Internal Revenue Service. Instructions for Form 1023-EZ Rev January 2025
Larger or more complex organizations use the full Form 1023, which requires detailed financial projections, narrative descriptions of activities, and information on compensation.
Fees and Timing
The user fee is $275 for Form 1023-EZ and $600 for the full Form 1023.16Internal Revenue Service. Form 1023 and 1023-EZ Amount of User Fee Processing time varies. The EZ version often gets a determination within a few weeks. The full Form 1023 can take several months, and follow-up questions from the IRS can stretch it further. A favorable determination letter confirms your tax-exempt status and makes donations tax-deductible for donors.
Apply Separately for South Carolina Sales Tax Exemption
Federal 501(c)(3) status does not automatically exempt your nonprofit from South Carolina sales tax. Apply separately through the Department of Revenue’s MyDORWAY portal.17South Carolina Department of Revenue. Sales Tax Exemptions The main form for charitable nonprofits is Form ST-387, which covers items purchased for resale for charitable purposes. That exemption applies only to items bought for resale, not items the organization buys for its own use. You need an active Sales and Use Tax account before applying. Depending on your activities, other exemption applications may apply, including ones for admissions tax and concession sales.
Annual Filings That Keep the Status Alive
Every 501(c)(3) files an annual information return with the IRS. Which form depends on size:
- Form 990-N (e-Postcard) for organizations with gross receipts normally $50,000 or less. It’s a brief electronic notice, not a full return.
- Form 990-EZ for gross receipts under $200,000 and total assets under $500,000.
- Form 990 when gross receipts reach $200,000 or more, or total assets hit $500,000 or more.18Internal Revenue Service. Instructions for Form 990 Return of Organization Exempt From Income Tax
Missing this filing for three consecutive years triggers automatic revocation of tax-exempt status. The effective date of revocation is the due date of the third missed return.19Internal Revenue Service. Automatic Revocation of Exemption for Non-Filing Frequently Asked Questions Once revoked, the organization can no longer receive tax-deductible contributions and may owe income tax on revenue received after revocation. Reinstatement requires a new exemption application and another user fee. It’s one of the most common and most preventable ways nonprofits lose their status.
On the state side, renew your charitable solicitation registration every year with the financial report and $50 fee, and keep your registered agent and principal office information current with the Secretary of State. A simple calendar of these deadlines is the single most useful compliance tool a small nonprofit can adopt.
Activities That Can Cost You the Exemption
Three categories of activity can strip a 501(c)(3) of its federal exemption. Knowing where the lines are before you operate is cheaper than learning about them from an IRS notice.
Section 501(c)(3) organizations face an absolute ban on participating in political campaigns for or against any candidate for public office, including endorsements, contributions, and statements made on the organization’s behalf.20Internal Revenue Service. Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations Nonpartisan voter education and registration drives are allowed if they don’t favor a candidate.
No part of the organization’s earnings may benefit an insider beyond fair market value for actual services.21Internal Revenue Service. Inurement Private Benefit Charitable Organizations Reasonable salaries are fine; excessive compensation and sweetheart deals with founders, board members, or their families are the classic triggers.
Revenue from a regular trade or business that isn’t substantially related to the exempt purpose is subject to unrelated business income tax. An organization with $1,000 or more in gross unrelated business income files Form 990-T, and estimated tax payments are required if expected liability reaches $500.22Internal Revenue Service. Unrelated Business Income Tax Occasional bake sales and charity auctions generally don’t trigger it. An ongoing retail operation open to the general public often does.