South Carolina Single Member LLC strength?

Question

I've been researching legal entities, and have come across a lot of information about single member LLC's. In some states, they seem to be pretty much useless, and in others, quite strong for assett protection. What is the strength of a single member LLC in South Carolina?

I just finished forming a single member LLC for my Landscaping business. Now I'm trying to figure out how many more I need. I plan to flip houses, and buy houses for rentals. I currently own 1 rental in my personal name. I'm considering creating a LLC (taxed as an S-Corp) for my flipping opperations, and a separate LLC for each rental property I purchase. Is this overkill, or a wise move? LLC filing cost $110 here.

William Jones · Answer

Wow Dave Toelkes, $2,000 in SC seems like a lot.  It cost $110 in state fees to incorporate.  Get a lawyer you trust to draft up the paperwork and then use the same general format time and time again.  Maybe check with the lawyer ever so often.  Says the guy that hasn't ever been sued BTW.

I would suggest that you google asset protection and look here in BP.  There are lots of good articles, etc. to help you decide what to do.

Good luck!

Dave Toelkes · Answer

A few years ago, I consulted two different attorneys.  The first was willing to draft the articles of organization and the operating agreement, register the LLC, and transfer title of all properties to the LLC for a cost of around $2000.

The second attorney told me that SC is not a terribly litigious state (only one negligence suit in my county in the last 20 years), and, that most tenant claims for damages are settled for some amount well within the landlord's insurance coverage limits. The second attorney said he would do whatever it took to form and register an LLC if I insisted, but in his opinion, I did not really need it yet.  I was advised to forego the LLC for now until my net worth became greater than the total limits of insurance coverage including an umbrella policy.

Brock Adams · Answer

I am not an attorney however I followed my attorney's advise since I paid for it.  I will pass it on for Free.  If you choose to put all your houses into one LLC you MIGHT NOT have an issue HOWEVER if someone gets hurt on property A and B,C,D...are in that same LLC bucket then YOU will wish you could have had better separation.  This made sense to me since in my profession I am always preaching diversify you assets and do not put all your eggs in one basket.   Of course many might believe that your typical tenant would not have the sophistication to take it passed the layers of protection but it is not them I worry about as much as the attorneys they contact.  Remember locks are meant to keep the us honest but will not stop a criminal mind who has it out to get you.  Good Luck