Starting a business with someone can be an exciting endeavor. Spirits are high and hope springs eternal. Rarely is there a thought about what happens when things don’t go so well. Partnerships are like marriages that way.
Any good business formation lawyer will tell you that the key to a successful partnership is to communicate all expectations, hopes and fears in the beginning of the process. With proper business planning in advance, your partnership can weather any storm. This is particularly true with regard to limited liability partnerships.
What is a South Carolina Limited Liability Partnership?
A limited liability partnership is a business structure in which the partners have limited liability. This means that the partners will not be held liable for the negligence or wrongdoing of the other partner, nor will they be held liable for certain business debts. This type of structure provides more of a shareholder-type liability of a corporation, but without the double taxation.
How do I Form a Limited Liability Partnership in South Carolina?
Limited liability partnerships must be registered in South Carolina with the Secretary of State and are actually called “Registered Limited Liability Partnerships.” This distinction must also be included in the name of your partnership.
Before you get to registration though, there are a number of things you want to do to prepare. These steps include:
- Determining who will be in the partnership & what their contribution will entail (capital vs. sweat equity)
- Deciding how profits and losses will be allocated and whether distributions are appropriate
- Choosing a principal office and a registered agent for service of process
- Checking with the Secretary of State to ensure your name is available
- Talking to an experienced South Carolina business formation lawyer
Once you have registered your South Carolina LLP, you will need to register with the Department of Revenue and obtain an Employer Identification Number (EIN) from the IRS.
Does my South Carolina LLP Need a Partnership Agreement?
While South Carolina law does not require a limited liability partnership to have an agreement in place, it makes good business sense to draft one in advance of forming the partnership. This agreement will govern how the partnership operates, and should touch on things like:
- who is responsible for what aspects of the partnership
- what capital contribution requirements are
- who is entitled to partnership distributions and at what time
- what happens when a partner wants to leave
- what happens when the partnership ends
Engaging the services of a business formation attorney is invaluable at this stage of the game.
Who are LLPs Good For?
In South Carolina, any two or more people may form a limited liability partnership. Most commonly though, we see professionals like doctors, lawyers and accountants using this type of business structure because it protects each partner from liability for the professional malpractice of another partner.
If you are considering forming a limited liability partnership in South Carolina, talk to the experienced business formation attorneys at Willcox, Buyck & Williams. Solid legal advice awaits you in Florence at (843) 536-8050 or Myrtle Beach at (843) 461-3020.