StructureCost2026

Sole proprietorship vs C corp in South Carolina: which costs less (2026)

At $100,000 profit in South Carolina, a sole proprietorship costs $25,459 a year in tax and fees and a C corporation costs $29,413. On these figures a C corporation does not cost less at any profit up to $500,000.

More settings revenue, salary, filing status, payroll costs, PTET

+$3,954 a year

more for a C corporation than a sole proprietorship in South Carolina, at these numbers.

With these settings the switch does not pay at any profit from $10,000 to $500,000. Setting up costs $135 once in state filing fees.

South Carolina, 2026: $100,000 profit, single filer

ItemSole propC corpChange
Self-employment taxirs.gov, 2026 rates$14,130$0−$14,130
Federal income taxirs.gov, 2026 rates$8,235$4,948−$3,287
State income taxdor.sc.gov, checked Oct 22, 2026$3,094$2,476−$618
Payroll tax on your salaryirs.gov, 2026 rates$0$6,310+$6,310
Payroll service and tax return (estimate)$0$2,000+$2,000
South Carolina corporate license feedor.sc.gov, checked Oct 22, 2026$0$25+$25
State corporate income taxdor.sc.gov, checked Oct 22, 2026$0$2,736+$2,736
Federal corporate income tax (21%)irs.gov, 2026 rates$0$10,918+$10,918
Yearly cost$25,459$29,413+$3,954
What these figures count
  • State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
  • Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
  • The 20% qualified business income deduction with its income limits and the professional-service rule.
  • Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

Yearly cost at each profit level

ProfitSole propC corpDifference
$30,000$5,437$7,371+$1,934
$50,000$10,405$12,619+$2,214
$75,000$17,379$19,726+$2,347
$100,000$25,459$29,413+$3,954
$150,000$43,122$50,337+$7,215
$200,000$61,367$70,443+$9,076
$300,000$105,202$112,058+$6,856

Federal and South Carolina tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is C corporation minus Sole proprietorship.

What the switch takes in South Carolina

  1. File the Articles of Incorporation with Initial Annual Report (CL-1) with the state: $135 (fee).
  2. Get an EIN from the IRS (free, online) and open a business bank account in the new name.
  3. Incorporate with the state, then issue shares to yourself.
  4. Register with South Carolina as an employer and run payroll for your own salary: federal Forms 941 each quarter, Form 940 and a W-2 each year. New employers pay South Carolina unemployment tax at 1% on the first $14,000 of wages. dew.sc.gov See what payroll costs.
  5. Federal return each year: Form 1120, due April 15 for a calendar year.
  6. State upkeep each year: Annual report (Schedule D of SC1120 or SC1120S), no fee, due With the corporate return, 15th day of the 4th month after year end (3rd month for S corps). New for you: South Carolina corporate license fee.

What changes between the two

A C corporation pays 21% federal tax and South Carolina corporate tax on its profit, and the owner pays tax again on dividends (the double tax). A sole proprietorship pays no federal income tax itself: profit lands on the owner's return, where the 20% qualified business income deduction can apply.

The figures assume all C corp profit after tax is paid out as dividends. Profit kept in the company to grow it is taxed only at the corporate rate until it is paid out, which is where a C corp can come out ahead.

Questions

How much does it save at $100,000 in South Carolina?

Nothing. C corporation costs $3,954 a year more ($29,413 against $25,459).

When does a C corp make sense in South Carolina?

Mostly when profit stays in the company, when outside investors need one, or for the qualified small business stock exclusion. For an owner who takes the profit out, the second tax on dividends usually costs more. On these figures it never costs less up to $500,000.

More for South Carolina

Common cases in South Carolina

Other states