Choosing the right type of South Carolina business entity is essential for a start-up business. Selecting the most appropriate type of business entity involves tax considerations and non-tax related considerations and will allow a business to maximize its finances and operations.

Forms of South Carolina Business Entity Include:

Limited Liability Company (LLC)

  • South Carolina limited liability companies have independent legal and tax structures separate from their owners
  • They allow owners to separate personal assets and businesses’ assets and debts
  • LLCs are taxed similarly to sole proprietorships and partnerships but can also be taxed as a corporation
  • There are unlimited number of owners allowed
  • No formalities are required unless provisioned by agreement or contract, for example requirements for annual meetings or recording of meeting minutes
  • LLCs are governed by operating agreements which take principles from both partnership and corporations
  • Series limited liability companies are attractive for real estate investments and real property ownership.

C-Corporation

  • Corporations provide for independent legal and tax structures that are separate from their owners
  • This South Carolina business entity allows owners to separate personal assets and businesses’ asset and debts
  • There can be an unlimited number of shareholders
  • They are taxed based on corporate profits and shareholder dividends – there is double taxation
  • Corporate formalities like annual meetings and recording of meeting minutes are required
Choosing the right type of South Carolina business entity is an essential step for start-up business owners. Selecting the wrong business entity could result in unnecessary limitations on the business' operations. Selection of the business entity should be based on a number of factors including the owners, potential capital investment, operations and tax advantages.

S-Corporations

  • S Corps have independent legal and tax structures separate from their owners
  • They allow owners to separate personal assets and businesses’ debts
  • Owners are required to report their share of profit and loss on personal tax returns
  • There are limits on number of shareholders allowed and all shareholders must be U.S. citizens or residents
  • Formalities like annual meetings and recording of meeting minutes are required

Partnerships

  • Partners in a South Carolina partnership business entity are personally liable for lawsuits filed against their business
  • Filing with the South Carolina Secretary of State is not required
  • Partnerships are easily formed and operated
  • Owners are required to report their share of profit and loss on personal tax returns 

Sole Proprietorships

  • The owner of a sole proprietorship is personally liable for lawsuits filed against his or her business
  • Filing with the South Carolina Secretary of State is not required
  • Sole proprietorships are easily formed and operated
  • The owner is required to report his or her share of profit and loss on personal tax return