(COLUMBIA, SC) - Today Secretary of State Mark Hammond announced that the state of South Carolina has renewed the High Growth Small Business Job Creation Act through 2025. Initially passed in 2013, the High Growth Small Business Job Creation Act provides tax credits to angel investors who invest in newly formed, qualified businesses. Under the Act, an angel investor may be entitled to a tax credit of up to 35 percent of a qualified investment.
In order to be designated as a qualified business, a business entity must meet specific requirements and register with the Secretary of State. The specific requirements are the listed below:
- The business must be a corporation, limited liability company, general partnership, or limited partnership located and headquartered in the state of South Carolina.
- The business must have been organized for no more than five years before the qualified investment was made.
- The business must have 25 or fewer employees.
- The business must have had a gross income of $2 million or less in any complete fiscal year before registering as a qualified business.
- The business must be primarily engaged in one of the following activities:
- Software development
- Information technology services
- Research and development
- Ambulatory health care services
- Nursing and residential care facilities
- The business must not substantially engage in any of the following activities:
- Retail sales
- Real estate or construction
- Professional services
- Natural resource extraction
- Financial brokerage, investment activities, or insurance
- Entertainment, amusement, recreation, or athletic or fitness activity for which an admission or fee is charged
Once approved by the Secretary of State’s Office, the qualified business is registered for a period of 12 months. A qualified business may renew its registration as long as it continues to meet the statutory requirements for a qualified business.
“Since the High Growth Small Business Job Creation Act originally passed, nearly 300 companies have registered as qualified businesses, with over 90 registered at the end of 2019,” said Secretary Hammond. “Furthermore, these qualified businesses have reported creating over 1,200 full-time, part-time and temporary jobs. I am thrilled that our state has continued this program that promotes innovation and entrepreneurship, especially during this time of economic uncertainty.”
Businesses may file a registration application for a qualified business through the Secretary of State’s Business Entities Online Filing System. In order to apply for a tax credit under the High Growth Small Business Job Creation Act, angel investors must complete the Angel Investor Credit Application provided by the South Carolina Department of Revenue. For more information on angel investor tax credits, please visit the Department of Revenue’s website.