Disclosure: We earn a commission from some partner links. Commissions do not affect our editors' opinions or evaluations.
Once the biggest cotton and rice exporter, the Palmetto State used to be driven by agriculture and manufacturing. Though these industries are still strong, today, the state economy has changed its vector and is currently maintained by the service sector.
Located between New York and Miami and featuring a lengthy coastal line, South Carolina has access to both East Coast markets and markets abroad. As a result, the state has an advanced transportation system and serves as an active transportation and logistic hub.
Today, many big corporations have central offices in South Carolina including Boeing, Domtar, SCANA, ScanSource, and Sonoco Products. Besides, the state is largely supported by foreign investments, with BMW, Volvo, and Mercedes having their facilities there.
Though ranked 36th in the CNBC “Top States for Business” 2022 rating, the state has a number of statutory and tax incentives that make it attractive for small enterprise (SME) starters.
After consistent year-by-year growth since 2009 (Statista), in 2020, South Carolina gross domestic product dropped by 2.5% against 2019 as a result of the negative pandemic impact;
In 2021, the state GDP jumped up by 7% to $220.69 billion and in 2022, it demonstrated further steady growth to $223.9 billion showing economic recovery;
With an annualized GDP growth rate of 2% within a 5-year period, the state ranks 13th across the US (IBISWorld);
Though the state economy heavily relies on foreign investments (with over 1.200 international firms operating in it representing 7% of the private sector), small private companies remain the major economic driver;
There are 463.549 active SMEs in the state that make up 99.4% of the entire business environment;
SMEs represent 84.2% of the state exporters and in 2020, they infused $2.8 billion into the state export worth $27.8 billion;
The biggest number of SMEs is recorded in the service sectors, with over 116.000 entities operating in the other services and professional, scientific, and technical services which is 25% of the total SME count;
Mining, quarrying, and oil and gas extraction is the least popular industry for SMEs. It enlists only 123 small private firms;
The pandemic year (March 2020-March 2021) still brought new establishments to the market, with a net gain of 3.836 new SMEs;
The employment market was less optimistic during this period, though, with a net loss of 15.760 jobs;
Overall, small enterprises maintain 43% of the employment market in the state giving the job to 837.615;
The biggest SME employers are accommodation and food services and healthcare services, with 151.004 and 111.909 workers engaged in each of them respectively;
About 10% of the small enterprises in the state have employee payrolls;
In 2022, the minimum wage rate in SC is the same as the federal minimum of $7.25 per hour;
The average wage rate in the state is $18 per hour translating into an average annual income of $36.421;
The unemployment rate across the state is 3.4%.
Top 10 Industries for Small Businesses in SC
Other services (excluding public administration)
Professional, scientific, and technical services
Administrative, support, and waste management
Real estate, rental, and leasing
Healthcare and social services
Transportation and warehousing
Entertainment and recreational services
Accommodation and food services
SC Small Business Demographics
Women own 172.744 small enterprises in South Carolina which equates to 44.2% of the total SME count in the area. 8% of those are employer entities;
Men control 240.464 small private firms, and over 20% of them provide work to the hired labor force;
18.083 SMEs are owned by women and men together, and more than 50% of them are work providers;
Ladies represent nearly 49% of the entire labor pool;
Veterans own quite a noticeable 10% share of SMEs and ensure 6.7% of private sector workers;
Ethnic groups possess nearly 25% of small companies and account for 36% of employees in the state;
Ownership of immigrant-controlled SMEs is split between the racial minorities in the following way:
Black Americans: 72.705;
American Indians and Alaska Natives: 896.
SC Small Business Formation
To form a South Carolina LLC or corporation, you need to get your future company documents registered by the state and pay a $110 filing fee;
To keep your newly established business eligible and in good standing with the state, you should designate a South Carolina registered agent that will receive and process your business mail and monitor your filing requirements;
Individual incomes of LLC owners are taxed under a graduated system. Tax brackets start from 0% at the lower end and grow to 6.5% at the higher end in 2022, depending on the income amount;
Corporate incomes are levied under a flat rate of 5%;
Corporations in the state are also exposed to a corporate license tax that is calculated under the following formula: a $15 flat annual payment plus $1 for each $1000 of capital stock and paid or capital surplus;
The minimal corporate license fee is $25;
A statewide sales and use tax rate is 6%, and counties are entitled to levy an additional local tax of 3% to the max, with an average tax rate hitting a 7.44% mark.