A corporation is a distinct legal entity created by certain specific procedures of South Carolina law, including registering the corporation in the office of the Secretary of State. Because it is a distinct entity, a corporation is treated differently from other types of business.
If the corporation pays you wages, dividends or stock you will have to pay income tax on these payments. Unless the corporation elects to be taxed as a Subchapter S Corporation, the corporation does not pass profits and losses of the business directly to you as a shareholder; you will only have taxable income to the extent of dividends or compensation you receive. A corporation is also treated differently by liability law. One advantage of a corporation is the limited personal liability for corporate obligations. If the corporation is sued, generally you will not be responsible for the corporate debts; only the corporation will be liable. However, there are exceptions. A Corporation that is not carefully organized and run can sometimes be "pierced," which means that shareholders could become liable. Also, directors, officers and employees may have liability. Another advantage of a corporation is your ability to transfer your stock and easily leave the business. In a corporation, a shareholder generally may transfer his interest in the company to anyone he desires so long as there is not an agreement restricting transfer of stock. Therefore, even if you started the business, you can sell or transfer your stock and leave the business. However, in most small corporations an agreement governing stock transfers is advisable. Any transfer of stock, whether it is from the corporation or from a shareholder, must comply with state and federal laws governing securities.
In South Carolina, some smaller corporations may elect to be a "Statutory Close Corporation." This type of corporation can streamline its management and shareholder relationship by adopting certain advantages set out in the corporate code. Many corporations may qualify to elect for the purposes to be a Subchapter S Corporation. This type of corporation has all the non-tax characteristics of a corporation, including limited liability, but it has elected to be treated under special tax rules. In general, these tax rules provide that the corporation will be taxed only at the shareholder level, which means that any corporate profits and losses will be taxed to you as a shareholder even if you do not receive all your share of the profits. Many small businesses find it to their advantage to elect Subchapter S treatment. A Subchapter S Corporation, although it is a corporation, is treated like a partnership for tax purposes.
There are a number of requirements to make a Subchapter Selection. First, a Subchapter S corporation must have 35 or fewer shareholders and no more than one class of stock.
In addition, certain corporations will not qualify as Subchapter S Corporations and certain shareholders will not qualify to be owners of a Subchapter S Corporation. The timing of making the election is also important. If you are interested in forming a Subchapter S corporation, you should consult your attorney to see whether your business can qualify as a Subchapter S corporation.
If you are interested in forming a sole-proprietorship, partnership or limited partnership, you should read Setting up an Unincorporated Business below.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
Sole Proprietorship
The simplest form of a business is a sole proprietorship. In a sole proprietorship, you dedicate a portion of your money to business use, but do not form a new legal entity. You simply use your money and run your business. No written document is necessary to form a sole proprietorship, but a tax identification number, certain city or county business licenses, and types of insurance, such as worker's compensation insurance, may be required. Because a sole proprietorship is not a separate legal entity, you, as the sole proprietor, will have unlimited personal liability for business obligations. You will also bear all the tax consequences of any profit or loss, which means that all profits will be added to your taxable income and all losses deducted from your taxable income. You will be responsible for withholding taxes on your employees. Basically, a sole proprietorship is an extension of yourself.
Partnership
A second form of business entity is a partnership. A partnership is a group of two or more people who come together to carry on a business for profit. In South Carolina you are not required to execute a written partnership agreement, but, in order that all partners may fully understand their responsibilities and obligations, you and your partners should seriously consider signing a partnership agreement before you begin business.
This agreement should discuss all aspects of your business, including the amount of money each of you puts in, percentages of ownership, the risk of loss per partner, a decision-making process, restrictions on transfer of partnership interests, and what will happen if someone decides to withdraw from the partnership. A partnership is treated for many purposes as a separate legal entity and, thus, a partnership can sue or be sued in the partnership name. However, for other legal purposes, a partnership is not treated as a legal entity. For example, you as a general partner will be subject to unlimited liability partnership obligations, and the acts of other partners, if these are performed in the scope of the partnership relationship. A partnership is not a separate entity for tax purposes, but must file informational returns and withhold taxes on its employees. As a result, all partnership profits and losses will be taxed to you each year according to your partnership share even if you do not receive any money from the partnership. You will also receive a proportionate benefit of tax losses from the partnership to the extent of your "basis" in the partnership.
Limited Partnership
A third form of business entity is a limited partnership. A limited partnership is a business formed by two or more persons, at least one of whom is a limited partner, meaning he invests money but does not participate in management of the business. A limited partnership must also have one or more general partners, who control the business. In South Carolina you must file a Certificate of Limited Partnership with the Secretary of State to form a limited partnership. As with a partnership, a general partner in a limited partnership has unlimited personal liability for partnership obligations. Unlike a general partner, a limited partner will basically only be liable for the amount of his capital contribution to the limited partnership, but there are exceptions. For tax purposes a general partnership and a limited partnership are treated basically the same. All profits and losses will flow through to the individual partners each year and, thus, each partner's taxable income will reflect any profits regardless of whether they receive any of the profits or pay any of the losses.
State law requires that certain arrangements among partners in a limited partnership be contained in a written partnership agreement. Among these items required for a partnership agreement are the capital contributions required of partners, special allocations of profits and losses, a right to distributions prior to dissolution, and certain additions and withdrawals of partners. For these and other reasons, it is very important that a limited partnership have a comprehensive written partnership agreement. Both general and limited partnerships must meet other legal requirements. For example, for some businesses, tax identification numbers and business licenses and types of insurance, such as workers compensation insurance, will have to be obtained prior to beginning business. In certain limited circumstances, filing must be on behalf of partnerships with county offices. Limited partnership interests are securities, requiring compliance with state and federal laws governing securities.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
A credit card is a convenience that lets the consumer buy goods and services without having to carry cash and checkbooks. This plastic card represents the legal agreement you have with a creditor such as a department store or bank.
When you open a credit card account, the creditor is required by law to set out the terms of the account in writing, including the annual percentage rate and any fees such as an annual fee, over-the-limit fees and late charges that will be charged for the privilege of having the account. This information is usually part of a written agreement, or contract, that also has other terms and conditions related to the account such as minimum payment requirements and what actions by you would violate the agreement.
Most credit cards are for accounts on which you are required to make regular payments, but do not have to pay the whole amount that you owe every month. These accounts are called "revolving accounts." One of the conditions for most revolving accounts is that the consumer agrees not to go over the credit limit that has been set for him by the creditor. If he does, he may be required to pay an over-the-limit fee as well as pay the amount of charges over the credit limit IMMEDIATELY or lose the privilege of making further charges on the account.
Laws relating to seller and lender credit card accounts are similar but with some differences. When you have a credit card issued by a seller, such as a department store, your use of that credit card results in an obligation directly to the seller. In other words the creditor and seller are the same. However, when you use a credit card issued by a bank to make a purchase from a store or other seller, you owe money directly to the bank which, in effect, has made you a loan so you can buy goods or services from a seller. In that case, the bank has paid the store for you, and the bank is the creditor.
Creditors are required by law to send detailed monthly statements whenever there is activity on your account, such as a charge or a credit. If you believe there is a mistake on your statement, the Fair Credit Billing Act gives you a legal right to contact the creditor, and if there was a mistake, to have it corrected. The law defines a billing error as any charge for something you did not buy or for a purchase made by someone not authorized to use your account. A billing error is also something that is not properly identified on your bill, or is for an amount different from the actual purchase price. Another form of billing error is when you are billed for an item that you did not accept when it was delivered, or which was not delivered according to agreement. Billing errors may also include errors in arithmetic, failure to reflect a payment or other credit to your account, or failure to mail your statement to the correct address. You also have the right in some instances not to pay certain charges on your bill if you have a legitimate dispute with the seller of goods or services charged to your account.
If you think your bill is wrong, notify the creditor in writing immediately. Write to the address the creditor lists for billing inquiries, giving your name, account number, explanation of the error and the amount involved. You are still obligated to pay all parts of the bill not in dispute. The creditor must reply to your letter within 30 days. However, the creditor has up to 90 days to correct your account or tell you why they believe the bill is correct. If the creditor made the mistake, you do not have to pay any finance charges on the amount in question. Your account must be corrected and you must be sent an explanation of any amount you still owe.
Under South Carolina law, creditors may change the terms of a credit card account after the account has been opened. If the change is significant, such as increasing any charges for using the account, creditors must give you advance notice in writing. In some instances, the new terms will apply unless you send a written request to your creditor to terminate your account before the new terms go into effect. If your account is terminated as a result, you may continue to pay off your account under the old terms.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
The Equal Credit Opportunity Act prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance or because you exercise your rights under federal laws. This act applies to banks, savings and loan associations, credit unions, finance companies, department stores, credit card issuers, car and appliance dealers and all others who regularly grant credit. The Act does not guarantee credit. You must still pass the creditor's tests of creditworthiness, but the tests must be applied impartially, and without discrimination.
Creditors look at factors like income, expenses, debts and credit history in deciding whether or not to issue you credit. If you are denied credit, ask the creditor why. The creditor may tell you ways to improve your chances of getting credit.
The best way to determine if you are a victim of credit discrimination is to look at the questions in the credit application. Here are some of the basics of what creditors can and cannot do under this law:
Generally, creditors may not question you about or consider your race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. They cannot ask for information about your spouse unless your spouse will be allowed to use the credit, is applying with you, has a legal interest in property used as collateral, or if you are relying on your spouse’s income or on alimony or child support income from a former spouse.
Men and women are protected from discrimination based on sex and marital status. For example, you may not be denied credit just because you are a woman, whatever your marital status. Creditors may not require you to reapply for credit just because you marry or become widowed or divorced. Nor may they close your account or change the terms of your account on these grounds. However, creditors may ask you to reapply if you relied on your former spouse's income to obtain revolving credit.
Generally, creditors cannot consider your sex, race or national origin, although you may be asked to provide the information if you want to. It helps government agencies enforce anti-discrimination laws . You need not use Mr., Miss, Mrs. or Ms. with your name on an application. You may not be denied credit because of plans to have children.
Creditors must consider your income, even from part-time employment. Creditors may also consider whether income is steady and reliable. A creditor may require that your income be uninterrupted, particularly alimony, or part-time wages. Creditors may not consider whether you have a telephone listing in your own name. They may ask if there is a phone in your home.
A creditor may also ask your age, but if you're 18 years or older, a creditor may not turn you down or decrease your credit just because of your age. A creditor may ask you when you plan to retire or how long your income will continue. You may not be denied credit just because you receive Social Security or Public Assistance, but information related to these sources of income could affect your ability to get credit. So, a creditor may ask your dependents' ages since you may lose benefits when they reach a certain age.
Creditors must tell you whether your application is accepted or denied within 30 days of receiving a completed application. If it has been approved, notice can occur by sending you the credit card, or money, or approving your loan.
Sometimes the creditor offers terms other than those requested in your application. If so, you may be given the opportunity to accept this "counter-offer" within a set period of time.
If your application is denied, the creditor must give you the following information, in writing: 1) creditor name and address, 2) what action was taken, 3) notice of what discrimination is under the Act, 4) the name and address of the federal agency to contact if you believe the lender violated the anti-discrimination law; and 5) specific reasons why credit was denied, or details on how you can get this information. If not immediate provided, the information may be requested in writing within 60 days of notification of denial and the creditor has 30 days to respond to you.
If you feel you have been illegally discriminated against, contact your attorney or the federal agency which regulates the creditor. You may contact the Department of Consumer Affairs to find out the proper agency. Call 800-922-1594 or visit www.consumer.sc.gov.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
A consumer's right to cancel certain contracts is referred to as the "right to rescind" that contract. Sometimes this is also referred to as the “cooling-off rule.”
When consumers are in their own home, or someone else's home, they cannot walk away from a salesperson like they would be able to in a retail store. Consumers are often persuaded or pressured by a skillful and convincing salesperson to make a purchase. For that reason, there are both state and federal laws which allow consumers to cancel contracts for credit sales entered into in such situations.
Under federal law, a "door-to-door sale" is a sale that takes place at a location that is not the seller's permanent place of business. Most "door-to-door sales" take place in the consumer's home. However, sales which take place in facilities rented by the seller on a temporary or short-term basis can also be classified as "door-to-door sales" and include the consumer's right to cancel the contract, or the “cooling-off rule.” Other examples include hotel/motel rooms, convention centers, restaurants, a party sale type transaction and similar situations, even if the consumer invites the salesperson to make a presentation in his or her home.
South Carolina law defines "door-to-door sales" (or home solicitation sales) as a consumer credit sale of goods or services sold in person by a salesperson at the consumer’s residence or home. The fact that a credit sale is made at a consumer’s home gives the consumer special rights, mainly the right to cancel the transaction without cost by midnight of the third business day after signing the agreement.
In order for the consumer to have the right to cancel the contract, the sale must be either a credit transaction in which the seller extends credit to the buyer, or else a sale, lease or rental of consumer goods or services with a purchase price of more than $25. Home solicitation sales, or door-to-door sales, do not include sales made pursuant to preexisting revolving charge accounts with the seller or transactions conducted entirely by mail or telephone.
To cancel a door-to-door sales contract, the consumer must mail or deliver a signed and dated written notice to the seller's address as it appears in the sales contract. The cancellation must be sent by the consumer no later than midnight of the third business day after the date the sales contract is signed, unless the contract allows more time. As long as the notice is sent before that deadline, the notice is effective in canceling the contract. There is no required form for this notice as long as the consumer expresses in writing his or her intention not to be bound by the home solicitation sale and the consumer does not have to give a reason for cancelling the contract.
The seller must give a copy of the contract to the consumer at the time the agreement is signed and it must include a written statement of the consumer’s right to cancel the agreement. If the seller doesn’t give this notice, the consumer can cancel by notifying the seller in any manner and by any means.
There is an exception to the right to cancel a door-to-door credit sale, or home solicitation contract. The consumer may not cancel a contract if he or she requests the seller to provide goods or services without delay in an emergency situation. An emergency situation is defined as one in which the goods or services are required to protect the health, safety, or welfare of persons or to prevent damage to the property of the consumer. The seller can require payment only if the consumer has provided a separate signed and dated statement to the seller describing the emergency and that the goods or services are required for emergency purpose. Without this statement, the seller cannot require payment if the consumer takes action to cancel the contract.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
This information emphasizes the buying and selling of residential real estate. Many would-be home buyers use the services of a real estate agent. Although the use of a real estate agent is not required, he or she can help by handling some of the details involved.
Upon locating a home or other real estate, one usually makes an offer to the owner, often through the agent (if one is involved). This offer is usually in the form of a legal "Contract". This is very important because the purchaser and seller will be bound by the terms of the Contract once they are agreed to.
Although the price of the property contained in the Contract is very important to you at the time, there are many other provisions contained in a normal contract which need consideration. Therefore, you may want to consult with an attorney before the Contract is signed. The attorney will be able to review the Contract and may suggest changes to protect your interests, as well as to explain the remaining terms of the Contract. Remember that the entire transaction is governed by the words contained in the contract. After the Contract has been signed, and accepted by the Seller, very little can be done to change the terms of the agreement, unless both parties agree to such changes in writing. The Contract will also contain the provisions that determine what will happen if either party fails to comply with the terms of the Contract. The buyer may have a right to terminate the Contract if he can not obtain a loan for the purchase of the property.
Generally, after finding a home, a prospective buyer will meet with a lender to arrange for a loan on the property.
Lenders generally require a prospective buyer to pay a down payment from their own funds, (which might include earnest money paid at the time the Contract is signed with the remaining amount to be paid at the closing). The Lender will require an application in order to consider a buyer for a loan. The additional costs which will arise as a part of the loan transaction should be discussed with the lender. These may include various loan fees, interest and tax escrows, insurance premiums and survey fees, and the fee charged by the closing attorney.
Another important part of the closing process that will be handled by the buyer's attorney is the examination of the public records to determine if there are any defects in the seller's title, or a "title search". An "as-built" survey by a licensed surveyor is usually required to confirm that the boundaries of the property conform with the boundary description contained in the public records, and that the house is located within the boundaries.
After the title search, a time will be set for closing the sale. At the closing, the buyer's attorney will present the buyer with the various documents necessary to complete the transaction, including those required by the Lender, and a settlement statement listing the various closing costs required by the terms of the Contract and by the Lender. The attorney will supervise the signing of all of the documents and then will have the documents recorded with the proper public office. Feel free to ask the attorney to explain any part of the legal documents at that time.
Title insurance is almost always required by lenders and is generally obtained by the closing attorney. The premium for the title insurance policy is paid only once by the purchaser as a part of the closing costs. The title insurance policy insures that the lender has a proper mortgage lien on the property, and that there are no defects in the title which may adversely affect the lender's lien. The policy obtained for he lender's benefit does not insure the purchaser against loss in the event that there is a defect in the title. For an additional premium, which often costs only a small amount, the buyer can purchase an owner's title insurance policy which will insure the buyer's title to the property. The buyer may want to discuss the details of Coverage with his or her attorney.
A buyer should purchase casualty insurance to protect a new home from losses such as fire or other casualty. Lenders usually require this. In addition, a buyer should purchase liability insurance to protect himself and members of his family residing in his home.
Also, an accountant or other tax adviser might be consulted with regard to the sale or purchase, as numerous tax considerations exist in such a transaction.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
Life insurance is available today in several different forms. The three most common are term life, whole life and universal life.
Term Life
Term life insurance provides coverage for a specified term of years. If you are the policyholder and you die during the term, the insurance company will typically pay the face amount of the policy to the person you named as the beneficiary. The term of the insurance can vary from one year up to 15 or more. The insurance premiums for term life generally increase with age. Term insurance is the most economical form of life insurance.
Whole Life
Whole life insurance generally provides for a death benefit in return for a fixed premium that remains constant for your whole life. In addition, a whole life insurance policy typically contains a savings type provision that allows you to surrender, or "cash in" the policy. The drawback, of course, is that whole life is much more expensive than term insurance.
Universal Life
Universal life insurance is the newest form of insurance. While similar to whole life, universal life typically provides more flexibility than whole life. Universal life provides you with an annual statement of the amount of the premium credited to your cash value account. Unlike whole life, the cash value money is available almost anytime. You can borrow or withdraw from your fund without jeopardizing coverage. Generally there is a guaranteed minimum interest rate at which you repay the money borrowed. Finally, the amount of the premium and death benefit can vary at the discretion of the policyholder.
Life insurance proceeds are payable to whomever you named as the beneficiary. If an individual is named as beneficiary, the insurance benefits would by-pass your estate and would be paid directly to the individual. Of course, if you designate your estate as the beneficiary, your will would dispose of the proceeds or the proceeds would be disposed of as provided by law if you die without a will.
If you are trying to collect on a life insurance policy, it is usually fairly simple. First, contact the insurance company or the insurance company's local agent to obtain a claim form. Fill out the form and return it to the company along with a death certificate and the original policy. Keep copies of everything for your records.
When the insurance company responds, be sure you understand the benefits to be paid. If you run into a problem in collecting insurance benefits, an attorney should be consulted.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
If a person pays you for goods or services with a check and that check is then dishonored by the bank on which it is written, you may be able to collect on the check by proceeding under the so-called South Carolina Bad Check law.
The law provides that it is unlawful for any person, with intent to defraud, to draw, make, issue or deliver to another a check when at the time of drawing, making, issuing or delivering such check, the person (“maker”) does not have an account in such bank, does not have sufficient funds to pay the check, or if the check has an incorrect or insufficient signature on it. This applies to checks used for the payment of money, whether given to pay rent, make payment on a lease, obtain money, services, credit or property of any kind, or anything of value, including an obligation or debt of state taxes.
It is important that you understand that not all checks that are dishonored come under this law. For the law to apply certain requirements must be met. First, the payment by check must be made at the same time that the goods or services are delivered. Second, the check must not have been postdated. Third, the maker of the check must not have given you any reason to believe that the check is no good, such as asking you to hold it for a few days. Fourth, you must have presented the check for payment within 10 days of receipt. And finally, you must have obtained the full name, home address and home telephone number of the maker at the time the check is given to you and you must show that you witnessed the maker's signature by initialing the check. It is important to note that checks more than 180 days old cannot be criminally prosecuted.
Remember that by proceeding under this law you may cause the arrest of a person, so it is important that you proceed correctly. If you don't, the person from whom you are trying to collect may have grounds to file a complaint against you.
Once you have determined that the check in question does come under the Bad Check law, you are required to send written notice to the maker of the check to the address printed or written on the check. This notice must be sent by certified mail and must include the check number, the date the check was written, the bank on which it was drawn, who the check was made payable to, and the amount of the check. You must give the reason why the bank refused payment and also advise the maker that payment of the check in full plus a $30.00 service charge must be made within ten days from the date the notice was mailed. You must advise the maker of the check that failure to make payment in full may result in you applying to the criminal court for prosecution under the Bad Check law.
If the check (including the service charge) is paid, that should end the matter. In the event that payment is not made you must decide whether to begin criminal proceedings against the maker of the bad check. You will have to give the magistrate evidence that you sent the proper notice ten days earlier in order to get a warrant. The law prohibits anyone from using the criminal process to collect a debt; prosecutions are instituted primarily to vindicate the rights of the public by punishing criminal conduct. So at this point you must be prepared to suffer the loss of the payment in exchange for seeking punishment of the person who gave you a bad check. However, if the maker of the check subsequently pays you after criminal charges have been filed but before a hearing has been held, you can drop the charge if you notify the court at least 24 hours before the court date that the matter has been resolved.
It is strongly suggested that you obtain an attorney to advise you whether you should proceed under the Bad Check law in order to collect on a bad check. Unless all requirements for using the law are met, you could be subjecting yourself to a lawsuit if the maker of the check is arrested and it is later determined that the matter should not have been brought under the Bad Check law.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
For additional information on consumer issues or to file a consumer complaint against a business, contact the S.C. Department of Consumer Affairs.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. at (803) 799-7100.