Starting a sole proprietorship is fairly straightforward because South Carolina does not require you to file formation paperwork. It is easy to start a sole proprietorship in Myrtle Beach or Florence, but that simplicity also means there is no legal barrier between your business obligations and your personal assets. Getting things wrong can lead to penalties, unexpected tax bills, and personal liability for every business debt you take on. Understanding what you need to do and what risks to plan for matters from the beginning. A South Carolina business law attorney at Willcox, Buyck & Williams can help you start your business on solid legal footing.
What Is a Sole Proprietorship?
A sole proprietorship is the simplest form of business structure in the United States. It is an unincorporated business owned and operated by one person, with no legal distinction between the owner and the business entity. In South Carolina, you do not need to file formation documents with the Secretary of State to create one. You become a sole proprietor the moment you start conducting business on your own.
This simplicity makes the sole proprietorship a popular choice for freelancers, consultants, and small business owners across South Carolina. The structure works well when you want to test a business idea, offer professional services, or operate a small retail shop without the cost and complexity of forming a separate legal entity. However, the ease of formation does not eliminate your legal and tax obligations, and there are several steps you should take before you begin operating as a sole proprietor.
How to Set Up Your Business in Florence or Myrtle Beach
Although South Carolina does not require sole proprietors to register with the state, there are local and tax-related steps you need to take before you start operating. The specific requirements depend on where and how you plan to conduct business, but the following steps apply to most sole proprietors in the Florence and Myrtle Beach areas.
If you plan to operate under a name other than your own legal name, you can usually register that trade name (often called a “doing business as” or DBA) with the appropriate local office in the county or city where you do business, such as the county or city clerk or the business license office. South Carolina does not maintain a statewide DBA registry for most businesses, so these filings are handled at the local level rather than through the Secretary of State.
The Certificate of Assumed Name form must be notarized before submission to the county clerk. Notarization procedures and fees vary by county. Some clerk offices may provide notarization services. Contact your county clerk directly to confirm what services and fees apply. While South Carolina does not legally require sole proprietors to file a DBA, doing so establishes a public record of your business name and may be needed for opening a business bank account.
You will also need to register for a business tax account with the South Carolina Department of Revenue through MyDORWAY, the state’s free online tax portal. If your business sells taxable goods, you must obtain a retail license before making any sales.
The retail license costs $50 and does not expire as long as the same owner operates the business at the same registered location and continues to make sales. However, the license must be surrendered if no retail sales are made for 24 consecutive months, and a new owner must apply for a new license if the business is sold.
Check with your local city or county government about business license requirements in your area as well, since these vary by municipality.
If you plan to hire employees, you will need an Employer Identification Number from the IRS. Even without employees, an EIN is useful for opening a business bank account and keeping your Social Security number off business documents. You can apply for one at no cost through the IRS website.
Depending on your industry, you may also need professional licenses or permits. South Carolina requires specific credentials for occupations such as contractors, cosmetologists, and real estate agents, among others. Check with the South Carolina Department of Labor, Licensing and Regulation to confirm whether your line of work has additional requirements.
Tax Responsibilities for South Carolina Sole Proprietors
As a sole proprietor, your business income flows through to your personal tax return. At the federal level, you are subject to self-employment tax of 15.3% on your net earnings if those earnings are $400 or more for the year, which covers your Social Security and Medicare contributions. You will report your business income and expenses on Schedule C of your federal return and calculate self-employment tax on Schedule SE.
At the state level, South Carolina taxes individual income at graduated rates. Sole proprietors report their business income on their state return and pay accordingly. If you expect to owe more than a certain threshold in taxes for the year, both the IRS and the state may require you to make quarterly estimated payments to avoid underpayment penalties.
South Carolina also requires businesses to collect and remit sales tax on most retail sales of tangible personal property. The state sales tax rate is 6%, and some local jurisdictions impose additional taxes. Your retail license registration through MyDORWAY sets you up to file and remit sales tax on the required schedule. Keeping detailed records of all income and expenses throughout the year simplifies tax preparation and protects you if your return is ever reviewed.
When a Sole Proprietorship May Not Be the Right Fit
The biggest drawback of a sole proprietorship is unlimited personal liability. Because there is no legal separation between you and your business, your personal assets, including your home, savings, and vehicles, can be used to satisfy business debts or legal judgments. This is a meaningful risk for businesses that involve physical services, product sales, or significant contracts.
If liability protection is a priority, forming a limited liability company or choosing another business structure may better serve your needs. An LLC creates a legal barrier between your personal assets and your business obligations while still offering flexibility in how you are taxed. Consulting with an attorney before you commit to a structure can help you evaluate the trade-offs based on your specific plans and risk profile in South Carolina.
Start Your South Carolina Sole Proprietorship on the Right Foundation
Launching a sole proprietorship is one of the fastest ways to start a business, but getting the details right from the beginning saves you time and money down the road. Whether you are opening a business in Florence, Myrtle Beach, or elsewhere in South Carolina, our attorneys at Willcox, Buyck & Williams have helped entrepreneurs across the region for over 125 years. Contact us to discuss your plans with an experienced business law attorney.