Entrepreneurs should exercise caution when choosing a state to incorporate a new firm in. This decision can have a lasting impact on a business. While establishing a business in their state is a no-brainer for South Carolinians, people from other states are probably unaware of what a great state it is for business. South Carolina is, in fact, one of the most pro-business states in the US.
According to Area Development’s “2018 Top States for Doing Business,” South Carolina ranked fifth in the nation in the cost of doing business.
Here are a few statistics that highlight the current state of small businesses in the Palmetto State.
Quick South Carolina Small Business Statistics for Entrepreneurs
- 99.4% of all businesses in South Carolina are small businesses.
- Small business employees represent 43.6% of all employed workers in the state.
- Military veterans make up 6.7% of workers and own 10.2% of small businesses in South Carolina.
- Ethnic minorities account for 30.3% of workers and 20.2% of small business owners.
- In the 2021 CNBC “Top States for Business” report, South Carolina ranks 39th out of 50 states.
- The per capita disposable income in South Carolina is $43,702.
- Administrative, support, and waste management collectively form the third-largest sector in terms of small business investment, with 47,282 small businesses operating within the sector.
- Between March 2019 and March 2020, 13,272 South Carolina enterprises opened and 13,882 closed, for a net loss of 610.
- In 2019, small firms exported goods worth $420 million.
- The per capita consumption expenditure in South Carolina is $34,689.
South Carolina Small Business Statistics
1. What is considered a small business in South Carolina?
According to the Small Business Administration (SBA), this definition varies widely by industry, revenue, and employment. But generally, a small firm has less than 500 workers (in the manufacturing industry) and less than $7.5 million in annual revenue (in the majority of nonmanufacturing industries).
There are currently 445,804 small businesses in South Carolina that represent 99.4% of all businesses in the state.
South Carolina accounted for 103,781 of all new business applications submitted nationwide (nearly 5.8 million) from January 2021 to January 2022, ranking 17th among states. Adjusting for population, South Carolina had 2,016 applications per 100,000 residents, which was more than the national average and ranked 11th among states.
Starting a business in South Carolina can be a daunting affair for most entrepreneurs due the hefty amount of paperwork involved. That’s why you need an LLC (limited liability company) formation service to prepare and process your registration documents on your behalf. Read my review of the best LLC services in South Carolina to find out more.
2. How many people are employed by small businesses in South Carolina?
Small businesses employ approximately 830,094 South Carolinians. That’s 43.6% of all employees in the state.
South Carolina’s minimum wage in 2022 is the same as the federal minimum wage, which is now $7.25 per hour. Employers who have tipped workers are eligible for a tip credit of up to $5.12. This implies that tipped employees can be paid a minimum cash wage of $2.13 per hour as long as their tips keep them earning at least $7.25 per hour.
Full-time students may be paid up to 85% of the South Carolina minimum wage (or $6.16 per hour) for up to 20 hours of work per week at certain employers, such as work-study programs.
3. South Carolina small business statistics by industry
The professional, scientific, and technical services sectors has the highest number of small businesses operating in it, with a total of 53,774 firms. Out of this number, 43,923 have no employees, 9,151 have 1–19 employees, and 700 have 20–499 employees.
The mining, quarrying, and oil and gas extraction sector is the smallest in terms of small business investment, with only 127 firms working in it.
4. South Carolina small business ownership by ethnicity
There are 5,190,705 residents in South Carolina. White/Caucasian Americans are the majority ethnic group, representing 68.6% of the population. They are followed by Black/African Americans (27%), Hispanic/Latino Americans (6%), Asian Americans (1.6%), American Indian and Alaska Natives (0.5%), and Native Hawaiian and Other Pacific Islanders (0.1%).
Small business ownership is distributed among these ethnicities as follows:
- White/Caucasian — 335,100
- Black or African American — 69,705
- Hispanic — 16,441
- Asian — 13,753
- American Indian and Alaska Native — 796
- Native Hawaiian and Other Pacific Islander — 150
5. South Carolina small business ownership by gender
Men own approximately 235,464 small businesses in South Carolina. Of these, 186,000 are nonemployer businesses, while 49,464 have employees. Women own 166,744 small businesses in South Carolina, of which 152,000 have no employees and 14,744 have employees on payroll.
There are 17,483 small businesses owned by both men and women.
6. Business taxes in South Carolina
South Carolina LLCs are pass-through tax entities, which means they do not have to pay income taxes to either the federal government or the state of South Carolina. An individual LLC member, on the other hand, will be taxed on personal income from the company’s revenue.
Furthermore, while LLCs are automatically classed as partnerships for tax reasons, you can decide to have your LLC classified as a corporation. In that instance, the LLC would be taxed similarly to a corporation in South Carolina. The top corporate income tax rate in the state is 5%.
South Carolina requires every business owner to adhere to the state’s tax code. Failure to report your taxes on time could attract serious legal penalties. It’s advisable to hire a reputable registered agent who will not only send constant notifications to remind you of filing deadlines but will also help you with the tax filing process. Read my review of the best registered agents in South Carolina to find out which company is best for you.
7. Small business financing in South Carolina
The Community Reinvestment Act (CRA) was passed by the 95th US Congress on October 12, 1977. Its aim is to encourage banks and financial institutions to serve the convenience and needs of the communities in which they are chartered to do business, including low- and moderate-income communities.
Large banks are required by the Community Reinvestment Act to disclose new small business loans. In 2019, reporting banks gave out $1.4 billion in loans to South Carolina firms with $1 million or less in sales. Total reported new financing to firms with loans of $100,000 or less was $1.3 billion, while total reported new lending to businesses with loans of $1 million or less was $3.5 billion.
8. How COVID-19 affects small businesses in South Carolina
South Carolina has the second-greatest economic exposure to COVID-19 of all states in the US based on the percentage of employees working in industries with a high or medium-high degree of exposure to COVID-19.
Around 70% of all employees in South Carolina, or 1,692,270 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. Also, 70% of all employees in South Carolina, or 1,692,270 people, work in industries with a high or medium-high degree of economic exposure to COVID-19.
9. South Carolina small business export statistics
In 2019, South Carolina’s recognized enterprises exported items valued at $37.8 billion. Small businesses accounted for 5,464 of those exporters, or 83.7%, and shipped items worth $2.9 billion, accounting for 7.8% of all exports by recognized businesses.
The Final Word
South Carolina’s integrative transportation infrastructure—interstates, port, and rail—makes it easier for small businesses to reach East Coast markets, as well as markets worldwide, thanks to its unique location between New York and Miami. The state’s cost of doing business, corporate tax environment, business incentive programs, and availability of capital and project finance continue to draw entrepreneurs from all over the country.
- US Small Business Administration
- Area Development
- South Carolina Small Business Chamber of Commerce
- The Tax Foundation
- The US Census Bureau