South Carolina LLC
Advantages and Disadvantages



South Carolina LLC Advantages and Disadvantages




South Carolina LLC Advantages and Disadvantages

Should I form a South Carolina LLC?

An South Carolina LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in South Carolina to your LLC. Your South Carolina LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your South Carolina LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.


Advantages and Disadvantages
of a South Carolina LLC

South Carolina LLC Advantages

  • Limited Liability: Owners of a LLC have the limited liability protection of a corporation.


  • Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.


  • No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.


  • Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.


South Carolina LLC Disadvantages

  • Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.


  • Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.


  • Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.


By South Carolina and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing your llc purpose, the names of your initial South Carolina LLC members, the name and address of your South Carolina registered agent, the details of which will be introduced into the body of your LLC operating agreement and related South Carolina LLC formation documents assembled for application to the state of South Carolina.


South Carolina's 2008 Business Tax Climate Ranks 26th

South Carolina ranks 26th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Georgia (20th) and North Carolina (40th).

South Carolina's Individual Income Tax System

South Carolina's personal income tax system features six income brackets with a top rate of 7% kicking in at a relatively low income level of $13,150. Among states levying personal income taxes, South Carolina's top rate of 7.0% is 12th highest nationally. In 2005, state individual income tax collections were $634 per person, which ranked 34th highest nationally.

South Carolina's Corporate Income Tax System

South Carolina's corporate tax structure consists of a flat tax of 5.0% on all corporate income. Among states levying corporate income taxes, South Carolina's tax ranks the state 41st highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $68.67 per capita and ranked 44th highest nationally.


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