To start a nonprofit in South Carolina, you form a nonprofit corporation with the Secretary of State for $50, adopt bylaws and a board of at least three directors, get a federal Employer Identification Number, and apply to the IRS for 501(c)(3) tax-exempt status for either $275 or $600. If you plan to ask the public for donations, you also register with the state’s Public Charities Division for $50 before you start soliciting.
Pick Your Corporation Type
South Carolina’s Nonprofit Corporation Act of 1994 recognizes three categories: public benefit, mutual benefit, and religious. Your articles of incorporation have to state which one you are forming.1South Carolina Legislature. South Carolina Code 33-31-202 – Articles of Incorporation
Most groups seeking 501(c)(3) status from the IRS file as public benefit corporations. That category fits charities, educational organizations, and other groups serving the general public, and it requires that any remaining assets go to another nonprofit or the government if the corporation ever dissolves. Mutual benefit corporations are built for organizations that primarily serve their own members, like trade associations or social clubs, and have more flexible rules on what happens to assets. Religious corporations are structured for churches and similar bodies, with added protections for internal governance and doctrine.
File Articles of Incorporation With the Secretary of State
The articles of incorporation are the founding legal document for your nonprofit, and South Carolina law spells out what has to be in them.1South Carolina Legislature. South Carolina Code 33-31-202 – Articles of Incorporation
The corporate name must include one of these designators: “Corporation,” “Incorporated,” “Company,” “Limited,” or an abbreviation such as “Corp.,” “Inc.,” “Co.,” or “Ltd.” Search the Secretary of State’s online business records first to confirm nobody else is using the name you want.
You also need a registered agent at a physical South Carolina street address who can receive legal documents for the corporation. An organizer or board member can serve in that role at no cost, or you can hire a commercial service for roughly $100 to $150 a year.
The Two Clauses the IRS Will Look For
If you plan to apply for 501(c)(3) status, build two provisions into the articles from the start: a purpose clause limiting the organization’s activities to those permitted under Section 501(c)(3), and a dissolution clause directing that any remaining assets go to another tax-exempt organization or the government if the corporation shuts down. The IRS will likely reject your exemption application without them.
Fees and Processing
You file through the Secretary of State’s online portal or by mail to Columbia. Online filings are typically processed within about 24 hours; paper takes several business days. Two fees are due together:
- Articles of Incorporation: $25, paid to the Secretary of State.2South Carolina Secretary of State. Articles of Incorporation – Nonprofit Corporation, Domestic
- Initial Annual Report (Form CL-1): $25 license fee. Every domestic corporation has to submit this form along with the articles.3South Carolina Department of Revenue. CL-1 Initial Annual Report
Total: $50. The state returns a stamped copy of your articles showing the date of incorporation. Keep it; you will need it to open a bank account and apply for tax-exempt status.
Set Up Your Board and Adopt Bylaws
South Carolina requires a nonprofit corporation’s board to have at least three members.4South Carolina Department of Consumer Affairs. SC Nonprofit Corporation Act Highlights At your first board meeting, adopt bylaws covering how often the board meets, voting procedures and quorum, officer roles (president, secretary, treasurer) and how they are selected, the process for removing directors or amending the bylaws, and terms of service (up to five years per term).
Adopt a conflict of interest policy at the same meeting. The policy should require directors and officers to disclose personal financial interests in transactions involving the nonprofit and step out of voting on those matters. The IRS treats this policy as a strong indicator that the organization is operating for the public good rather than for private benefit, and it includes a sample policy in the instructions for Form 1023. The IRS also reviews your bylaws when processing your tax-exempt application, so finish both documents before filing.
Get an EIN and Apply for 501(c)(3) Status
Before applying for tax exemption, get an Employer Identification Number from the IRS. Apply online at IRS.gov for free; the number is issued immediately.
Then choose the right version of the exemption application.
Form 1023-EZ for Smaller Organizations
You can use the streamlined Form 1023-EZ if you project annual gross receipts of $50,000 or less for each of the next three years and total assets of $250,000 or less.5Internal Revenue Service. Instructions for Form 1023-EZ You file it electronically through Pay.gov. The user fee is $275.6Internal Revenue Service. Form 1023 and 1023-EZ – Amount of User Fee The IRS processes about 80 percent of these within 22 days, though cases needing extra review can take up to 120 days.7Internal Revenue Service. Where’s My Application for Tax-Exempt Status
Form 1023 for Everyone Else
Organizations above those thresholds, or with complex structures like schools, hospitals, or supporting organizations, must file the full Form 1023. The user fee is $600,6Internal Revenue Service. Form 1023 and 1023-EZ – Amount of User Fee and the application calls for detailed descriptions of planned activities, financial projections, and compensation arrangements. Processing typically takes around six months, with 80 percent of determinations issued within 191 days.7Internal Revenue Service. Where’s My Application for Tax-Exempt Status
When the IRS approves your application, it issues a determination letter. That letter is your proof of federal tax exemption and the basis for donors claiming deductions on their contributions.
Register Before Asking the Public for Donations
South Carolina’s Solicitation of Charitable Funds Act requires charitable organizations to register with the Secretary of State before soliciting the public.8South Carolina Legislature. South Carolina Code 33-56-30 – Registration Statement; Filing; Form; Contents; Fee Registration goes through the Public Charities Division, and the fee is $50.
Your organization may be exempt from registration if it meets all of these conditions: it does not intend to solicit or receive more than $20,000 in public contributions in a calendar year, it holds an IRS tax-exemption letter, all its workers (including fundraisers) are compensated no more than $500 per year, and no assets or income benefit any officer or member personally.9South Carolina Legislature. South Carolina Code Title 33, Chapter 56 – Solicitation of Charitable Funds Act – Section 33-56-50 If contributions cross $20,000 during any calendar year, you have to register within 30 days. A separate, lower exemption at $7,500 is available regardless of whether you use professional fundraisers, with the same 30-day registration trigger if you exceed it.
Registered organizations renew annually within four and a half months after the close of their fiscal year.10South Carolina Secretary of State. Deadlines – Charities Missing the annual financial report can bring a penalty of $10 per day up to $2,000 per violation. Willful violations with intent to deceive carry fines up to $5,000 and up to five years of imprisonment.11South Carolina Legislature. South Carolina Code Title 33, Chapter 56 – Solicitation of Charitable Funds Act – Section 33-56-60
Keep Your Status: Annual IRS Filings
Tax-exempt status comes with an annual information return. Which form you file depends on size:
- Form 990-N (e-Postcard): gross receipts normally $50,000 or less. Brief electronic notice filed through the IRS website.12Internal Revenue Service. Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard)
- Form 990-EZ: gross receipts under $200,000 and total assets under $500,000.
- Form 990: larger organizations.
Any tax-exempt organization that fails to file for three consecutive years automatically loses its exempt status. Getting it back requires a new application and a new user fee.13Internal Revenue Service. Automatic Revocation of Exemption Put the deadline on the calendar before you leave your first board meeting.
What State Sales Tax Exemption Does and Doesn’t Cover
Federal 501(c)(3) status does not exempt your nonprofit from South Carolina sales tax. The primary state exemption for nonprofits covers items purchased for resale for charitable purposes, not items the organization buys for its own use.14South Carolina Department of Revenue. Sales Tax Exemptions To apply, file Form ST-387 through the Department of Revenue’s MyDORWAY portal. You have to set up a Sales and Use Tax account first, and the review takes 45 days. Separate exemptions exist for admissions tax, concession sales at festivals, and meals for charitable purposes, each with its own application.
What It Costs to Get Started
Minimum government fees to form a South Carolina nonprofit and obtain tax-exempt status:
- Articles of Incorporation: $25
- Initial Annual Report (CL-1): $25
- IRS Form 1023-EZ: $275 (or $600 for the full Form 1023)
- Charitable Solicitation Registration: $50 (if applicable)
A small organization using Form 1023-EZ and registering to solicit donations will spend roughly $375 in government fees. Larger organizations filing the full Form 1023 should budget at least $700. Those figures leave out optional costs: an attorney for a straightforward formation typically runs $1,500 to $5,000, and a commercial registered agent service is about $100 to $150 a year.