If you own a business in South Carolina, the law requires it to have a physical location in which it operates. This location will affect your taxes and other business liabilities.
The meaning of a principal place of business
A corporation or LLC’s principal place of business is generally the state where it was incorporated or formed. For businesses that were not incorporated or formed in any state, the principal place of business is generally the state where the company’s headquarters are located. For sole proprietorships and partnerships, the principal place of business is generally the state where the business has its main office or where the majority of its employees work.
People that work from home or have no physical offices
If you are a sole proprietor or partner and operate your business out of your home, your home office can be your principal place of business. This is especially true if you have customers or clients who come to your home office regularly and if you operate exclusively from your house.
If you travel frequently or have no fixed location, your principal place of business would generally be the state where you reside when you are not on the road. If your business has no physical location, such as might be the case for an online business, your principal place of business would generally be the state where you reside.
The importance of determining your company’s principal place of business
Your business’s principal place of business directly affects your taxes and other liabilities. For example, suppose you have a South Carolina-based business with operations in multiple states. In that case, you will need to pay South Carolina corporate income tax on any profits earned from out-of-state operations. Similarly, if you are sued over business disputes, the court will generally have jurisdiction over your company if the lawsuit arises out of your company’s principal place of business.
The law requires you to list your principal place of business when starting your company. Based on your unique circumstances, determining where this place is should be among the first things you need to deal with before your business starts running.