At minimum, every entrepreneur operating in South Carolina as a sole proprietorship should determine whether: (1) the most beneficial business form (most commonly a sole proprietorship, partnership, corporation, or limited liability company) is being used for the business, (2) legal requirements for that type of entity are being complied with, and (3) the operating procedures of the business risk causing the sole proprietor to needlessly incur liability.
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If you are operating as a sole proprietorship, you will already know that doing business as a sole proprietorship is the most maintenance free way to operate a business and has the least initial start-up expense. But you may not know that this ease in organization subjects you to unlimited personal liability for many types of law suits that you might otherwise personally avoid if you were operating your business as a limited liability entity, such as a single member limited liability company or a one-person corporation. While individuals are always personally liability for their own acts of negligence and omissions, those who own and operate a limited liability company or corporation are generally not personally liability for the acts of negligence or omissions of their employees and agents, nor are they personally liable for the debts or contractual obligations of the limited liability company or corporation, unless they specifically personally guaranty such debts or obligation. Other exceptions to this limited liability may also apply.
Depending on the city, township, or county in which your place of business is located or in which you physically carry out any of your business activities, you may be subject to business licensing requirements. You will want to check with appropriate city, township, and county governments to confirm whether your business activities in any city, town, or county are subject to business licensing requirements.
Businesses selling goods and certain types of services are also required to collect retail sales taxes if such goods or services are being sold to the end user (rather than to a reseller or wholesaler). Retail sales licenses are obtained annually through the South Carolina Department of Revenue and are generally required for each retail location.
If you operate a business in your home, you may also be subject to certain zoning ordinances which require you to obtain a permit to operate your business from your home and which place certain restrictions on your business activities. Contact the appropriate county, township, and city zoning offices for more information.
If you are operating as a sole proprietorship, you might want to consider having an attorney draft a durable power of attorney for your financial matters. Should you become incapacitated, there might not be anyone with the legal authority to manage the day-to-day affairs of your business, bank accounts, etc., until a court has been petitioned to grant such authority, usually to a family member. Such a delay may cause havoc with your business. Having a well drafted durable power of attorney in place in advance may go a long way toward ensuring the continuity of your business operations, in the event of something unexpected.
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IMPORTANT DISCLAIMER: This checklist (in whole or part) is not an exhaustive list of legal issues applicable to any business. Its purpose is strictly educational. It is not intended to be construed as legal advice, or a substitute for legal advice, and should not be relied on without consulting a licensed attorney competent in business matters. The federal, state, and local laws and regulations on which this information was originally created are subject to change without notice. No warranty, whether express or implied, is made as to the frequency or timeliness of any corrections or updates to the information provided herein.
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