How to Create a General Partnership in South Carolina | A Complete Guide

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Create a General Partnership in South Carolina

If you would like to create a general partnership in South Carolina, there are a few guidelines that you should understand. A general partnership is one of the things that a businessman considers since it comprises two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills, and each partner shares in the profits and losses from the business. You can start an LLC in South Carolina for your general partnership to personally carry potentially unlimited liability.

Knowing about the general partnerships will benefit you and several partners, making you form your business properly. If you want to know more about the general partnership, follow our steps to Create a General Partnership in South Carolina.

Webinarcare Editorial Team will help you create with thorough research and market study. Before starting a general partnership in South Carolina, you must be guided by all the factors we have gathered in this article.

Steps in Creating a General Partnership in South Carolina

What is General Partnership in South Carolina?

A general partnership in South Carolina is a business structure where two or more individuals come together to establish a business and agree to share the profits, losses, and management responsibilities. Each partner contributes skills, resources, and capital to the business and makes decisions collaboratively. In a general partnership, partners have unlimited personal liability for the debts and obligations of the business, meaning their personal assets can be used to cover any debts or liabilities incurred by the partnership. This type of business structure is relatively simple to form and offers flexibility in decision-making and management but lacks the legal protection of limited liability offered by other structures like South Carolina Corporations or limited liability partnerships.

It is recommended that you consult to South Carolina Business Attorney before beginning the process of forming your general partnership. They will understand what is best for you and your company. To shield your personal assets from corporate debts, you can always Start an LLC in South Carolina rather than a general partnership.

– WEBINARCARE EDITORIAL TEAM

Example of a General Partnership

An example of a general partnership could be a small marketing agency created by two friends, Shane and Jane. Shane has a background in graphic design, while Jane has experience in digital marketing strategies. They decide to join forces and create a marketing agency that offers clients a combination of their expertise.

Shane and Jane contribute their skills, resources, and capital to start the business. They agree to share the profits, losses, and management responsibilities. Both partners actively participate in the agency’s day-to-day operations, making decisions and working with clients collaboratively.

In this general partnership, Shane and Jane have unlimited personal liability for any debts or obligations incurred by their marketing agency. If the agency faced financial difficulties, both partners’ personal assets could be used to cover the debts. However, the simplicity and flexibility of the general partnership structure allow them to manage and grow their business together easily.

Individuals looking to collaborate and numerous service providers have chosen general partnerships as their preferred business entity. That’s frequently because of its simple design, low price, and simplicity of setup. Some general partnership examples include: 

General partnerships are also formed by partners who are spouses or other family members who want to operate a business together.

Steps in Creating a General Partnership in South Carolina

To create a general partnership in South Carolina, you must follow the guidelines below: choosing a business name, making a partnership agreement, requesting an EIN, getting a license and permit, and opening a bank account. 

Step 1: Choose a Business Name

Naming your business is one of the most important activities during the startup phase, especially if you will form an LLC in South Carolina. Your general partnership name serves as the foundation for your brand and is what clients use to connect you to the products or services you offer. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity without being hampered by irrelevant factors. 

For example, let’s assume the general partnership focuses on providing eco-friendly landscaping solutions. A potential name for this partnership could be “GreenScape Innovations.” This name highlights the business’s core values (eco-friendly) while also showcasing the industry (landscaping) and the innovative approach the partners aim to bring to the market.

For your to come up with this business name idea, here are some guidelines to consider when choosing a name for a general partnership:

  • Reflect on the Nature of the Business: Choose a name representing your products or services, and communicate your business’s essence to your target audience.
  • Keep it Simple and Memorable: A short, easy-to-pronounce name will be easier for customers to remember and share with others.
  • Make it Unique: Research the names of other businesses in your industry to ensure your chosen name stands out and does not infringe on any existing trademarks or copyrights.
  • Consider the Partners’ Names: Some general partnerships incorporate the partners’ names in the business name (e.g., Smith & Johnson Consulting). However, this approach may only be suitable for some businesses, especially if the names are difficult to pronounce or remember.
  • Test the Name: Share the potential name with friends, family, and potential clients to gather feedback and ensure it resonates with your target audience.
  • Check for Domain Availability: Research the availability of your chosen name as a domain name for your website and on social media platforms to ensure a consistent online presence.
  • Avoid Limiting your Business Scope: Choose a flexible name to accommodate future product or service changes. Avoid using specific locations, product names, or niche markets in the name if you plan to expand or diversify later.
  • Comply with Legal Requirements: Ensure the chosen name complies with any legal requirements or restrictions in your jurisdiction, such as avoiding misleading or offensive terms.
  • Consider Professional Input: Consult with South Carolina Business Attorney or trademark specialist to ensure your chosen name is legally sound and can be registered as a trademark if necessary.

By following these guidelines, you can choose a name for your general partnership that is memorable, unique, and effectively communicates your business’s essence.

In addition, most general partnership businesses use the last name of all of their partners.  For instance, if Jennie Kim and Lalisa Manoban enter business together, the partnership name is “Kim & Manoban” by default. However, if you would like to form a business name under something more appropriate, such as “EJI Design and Build,” then you’ll need to File a DBA in South Carolina with South Carolina Secretary of State.

Filing a DBA in South Carolina has two methods, by mail and in person., which costs around $10. There is five years validity in renewing your DBA. 

In South Carolina, if you do not wish to file your general partnership business right away but want to hold the name that you have decided on, then you can reserve your business name for 120 days. You must file a name reservation application in the South Carolina Secretary of State to keep the name. 

Step 2: Make a Partnership Agreement

After you have chosen a business name for your general partnership, the next step would be making a partnership agreement in South Carolina. A partnership agreement is a crucial document that outlines the terms and conditions governing a partnership. It helps to establish a clear understanding of each partner’s roles, responsibilities, and expectations and prevents disputes and misunderstandings.

Additionally, it discusses business management guidelines and potential contingencies that may arise, such as a partner’s passing or a partner’s decision to leave the partnership.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of South Carolina. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in South Carolina

After completing the partnership agreement, you should get or seek an Employer Identification Number (EIN) in South Carolina. An EIN will serve as your general partnership’s tax identification number. The Internal Revenue Service can provide you with an EIN. (IRS). It is a nine-digit number comparable to your Social Security number. EIN, on the other hand, is distinct from SSN. It is exclusively used for business-related operations, such as filing general taxes. The form must be filled out and sent to the IRS website. Obtaining an EIN cost between $30 and $280. 

The application of an EIN in South Carolina can be through the following:

  • Apply Online- The Online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4PDF application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

You can benefit in various ways once you obtain your EIN number. It will give your general partnership the final advantage to operate at its full potential without legal or court problems.

Step 4: Get a License and a Permit

You must have South Carolina Business License before your general partnership business operates. A business license is a document granted by a government agency that allows you to operate your business in the territory governed by that agency.

To legally operate your partnership, you’ll need a business license. You may need more than one license in South Carolina. Numerous general partnership licenses need to be filed and renewed regularly.

In South Carolina, the business license fee costs about $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in South Carolina.

Step 5: Open a Bank Account

After filing and receiving your general partnership license, you should open a bank account for yourself, your clients, and your employees.

A US bank account may make your business dealings in South Carolina easier because it increases your company’s authenticity and profitability. Most banks require an EIN for firms other than sole proprietorships to open a business account. Keeping separate finances also prevents you from combining personal and professional finances.

If you would like to open a bank account in South Carolina, check out the Best Bank for South Carolina Small Business.

Pros and Cons of a General Partnership in South Carolina

In forming a general partnership in South Carolina, there are pros and cons that you may experience. I will list the pros and cons for you to understand why and how a general partnership is crucial. 

Pros of Forming a General Partnership in South Carolina

  • Easy and Inexpensive to Form: General partnerships are relatively simple to establish, requiring minimal paperwork and registration costs compared to other business structures like corporations or limited liability companies.
  • Decision-Making: Partners can pool their skills, knowledge, and resources, leading to more efficient and effective decision-making and business operations.
  • Flexibility: General partnerships offer flexibility in management structure, profit distribution, and decision-making processes, allowing partners to customize their business relationships to best suit their needs.
  • Tax Benefits: In most jurisdictions, general partnerships are not taxed as separate entities. Instead, profits and losses are passed through to the partners, who report them on their income tax returns. This avoids the issue of double taxation that affects corporations.
  • Greater Access to Capital: With multiple partners, a general partnership may have increased access to capital and resources compared to a sole proprietorship.

Cons of Forming a General Partnership in South Carolina

  • Unlimited Personal Liability: In a general partnership, all partners have unlimited personal liability for the debts and obligations of the business. This means that each partner’s personal assets can be used to cover any debts incurred by the partnership, which can be a significant risk.
  • Potential for Conflicts: As partners share management and decision-making responsibilities, disagreements or conflicts can arise, negatively impacting the business’s operations and success.
  • Limited Lifespan: A general partnership’s existence is often tied to the lives of its partners. The partnership may be dissolved if a partner withdraws, becomes incapacitated, or dies, potentially leading to instability and uncertainty.
  • Difficulty in Raising Capital: While general partnerships may have more access to capital than sole proprietorships, they may still need help raising funds compared to corporations or limited liability companies, as investors may be more hesitant to invest in a business with unlimited personal liability.
  • Lack of Legal Distinction: Unlike corporations or limited liability companies, general partnerships do not have a separate legal identity from their partners, limiting the partnership’s ability to enter into contracts or own property in its name.

When considering a general partnership, weighing the pros and cons and assessing whether this business structure aligns with your goals, risk tolerance, and desired level of management involvement is essential.

Maintain Business License in South Carolina

You must maintain or renew your business license regularly now that you have established your general partnership. Make time at least once a year to check the status of your licenses. Then you will get everything important. You can deal with any problems that arise. In South Carolina, the business license fee ranges from $50 – $300, and varies by jurisdiction and license type.

Pay Your Taxes in South Carolina

Even if you have established your general partnership in South Carolina, pay your taxes and keep everything up to date so you won’t pay any penalty. 

South Carolina taxes information will help you with what to pay before or during the operation of your professional corporation. You can check out the South Carolina Small Business Taxes to further understand why you must pay your taxes on time. 

Can I Convert My General Partnership Into Another Business Entity in South Carolina?

By following the appropriate state procedures, you can convert your general partnership into another business entity, such as South Carolina Corporation converting to an LLC; or Sole Proprietorship to South Carolina LLC. This may involve filing conversion documents with the South Carolina Secretary of State’s office and paying any required fees.

FAQs

What is a general partnership in South Carolina?
A general partnership in South Carolina is a type of business entity where two or more people agree to share the profits and losses of a business.
What documents do I need to file to create a general partnership in South Carolina?
There are no documents that need to be filed to create a general partnership in South Carolina.
Can a non-resident of South Carolina be a partner in a general partnership?
Yes, a non-resident of South Carolina can be a partner in a general partnership.
How do I dissolve a general partnership in South Carolina?
To dissolve a general partnership in South Carolina, you must file a statement of dissolution with the Secretary of State.
Do I need a business license to operate a general partnership in South Carolina?
You may need to obtain a business license to operate a general partnership in South Carolina. It is advisable to check with the relevant authorities in your county or municipality.
Do general partnerships in South Carolina have to pay sales tax?
Yes, general partnerships in South Carolina must pay sales tax on products and services sold in the state.
Can a general partnership be formed for a specific project in South Carolina?
Yes, a general partnership can be formed for a specific project in South Carolina.
Do I need to register a trade name for my general partnership in South Carolina?
Yes, you must register a trade name if you want to do business under a name other than the names of the partners.
Can an LLC be a partner in a general partnership in South Carolina?
Yes, an LLC can be a partner in a general partnership in South Carolina.
What is the liability of the partners in a general partnership in South Carolina?
Partners in a general partnership in South Carolina have unlimited liability, meaning they are personally responsible for the debts and obligations of the business.
What is a partnership agreement in South Carolina?
A partnership agreement in South Carolina is a legal document that outlines the terms and conditions of the partnership, including each partner’s roles and responsibilities and how profits and losses will be shared.
Is it required by South Carolina law to have a partnership agreement for a general partnership?
No, it is not required by South Carolina law to have a partnership agreement for a general partnership.
How does taxation work in a general partnership in South Carolina?
A general partnership in South Carolina is a pass-through entity, meaning the profits and losses are reported on the partners’ individual tax returns.
Do I need to obtain an EIN for my general partnership in South Carolina?
If there are two or more partners in a general partnership in South Carolina, you will need to obtain an EIN for federal tax purposes.
Can a limited partner participate in managing the business in a South Carolina general partnership?
No, a limited partner cannot participate in managing the business in a South Carolina general partnership.
Can a general partner withdraw from the partnership in South Carolina?
Yes, a general partner can withdraw from the partnership in South Carolina, but it usually requires the unanimous consent of the other partners unless it is stated otherwise in the partnership agreement.
Can an agreement to form a general partnership be made orally in South Carolina?
Yes, an agreement to form a general partnership can be made orally in South Carolina.
What fees must be paid for forming a general partnership in South Carolina?
There are no formation fees that must be paid for a general partnership in South Carolina.
Will the Secretary of State provide a certificate of formation for a South Carolina general partnership?
No, the Secretary of State does not provide a certificate of formation for a South Carolina general partnership.
What is the difference between a general partnership and a limited partnership in South Carolina?
In a general partnership in South Carolina, all partners have unlimited liability and share in the management of the business. In a limited partnership in South Carolina, there are both general and limited partners, and the limited partners do not have management control.
Can a corporation be a partner in a South Carolina general partnership?
Yes, a corporation can be a partner in a South Carolina general partnership.
What is the duration of a general partnership in South Carolina?
A general partnership in South Carolina lasts until it is dissolved by the partners.
How is the ownership of a South Carolina general partnership divided?
The ownership of a South Carolina general partnership is divided based on the terms of the partnership agreement.
What is a foreign general partnership in South Carolina?
A foreign general partnership in South Carolina is a partnership that is formed in another state or country but is doing business in South Carolina.
Do foreign general partnerships need to register with the Secretary of State in South Carolina?
Yes, foreign general partnerships must register with the Secretary of State before doing business in South Carolina.
Is it possible to change the partnership agreement of a South Carolina general partnership?
Yes, it is possible to change the partnership agreement of a South Carolina general partnership, but it usually requires the consent of all partners.
Can a partnership terminate without the consent of all partners in South Carolina?
No, a partnership cannot terminate without the consent of all partners in South Carolina.
What is the role of the Secretary of State in a South Carolina general partnership?
The Secretary of State in South Carolina does not play a role in the day-to-day operations of a general partnership.
How do I start a general partnership in South Carolina?
To start a general partnership in South Carolina, you’ll need to file a Certificate of Partnership with the South Carolina Secretary of State.
What information do I need to include in the Certificate of Partnership?
The Certificate of Partnership will require that you include basic information about your partnership, such as the name of the partnership, the names of all partners, the entity’s address, and similar details.
Do I need to file the Certificate of Partnership with any other state agencies?
No, the Certificate of Partnership only needs to be filed with the South Carolina Secretary of State.
Is it possible to form a general partnership with just one other person in South Carolina?
Yes, you and one other person can create a general partnership in South Carolina by filing the Certificate of Partnership.
What type of liability do I have as a partner in a general partnership in South Carolina?
General partners in South Carolina are personally liable for all the debts and obligations of their partnership.
Can I be held liable for the actions of another partner in a general partnership in South Carolina?
Yes, if another partner in your general partnership is found to be personally liable, you too can be personally liable.
Can I limit my liability as a general partner in South Carolina?
It’s generally not possible to limit your liability as a general partner in South Carolina, although you can consider converting your partnership to a limited liability partnership.
What is a limited liability partnership?
A limited liability partnership allows partners to limit their personal liability for the debts and obligations of the partnership.
How do I convert my general partnership to a limited liability partnership in South Carolina?
You’ll need to file a Certificate of Limited Liability Partnership with the South Carolina Secretary of State.
Is it possible for my general partnership to become a corporation later on in South Carolina?
Yes, you can convert your general partnership to a corporation if you file the necessary paperwork with the South Carolina Secretary of State.
What documents do I need to file to convert my partnership to a corporation in South Carolina?
You’ll need to file articles of incorporation with the South Carolina Secretary of State, along with various other documents.
Can I dissolve my general partnership in South Carolina?
Yes, you can dissolve your general partnership in South Carolina by filing the appropriate paperwork with the Secretary of State.
What are the tax implications of running a general partnership in South Carolina?
General partnerships in South Carolina are pass-through entities, which means that partners report business profits and losses on their individual income tax returns.
Do I need any special business licenses to operate a general partnership in South Carolina?
Depending on the type of business you operate, you may need to obtain various business licenses and permits.
Do I need to register my partnership’s trade name in South Carolina?
Yes, if you plan to do business under a name other than your own partners’ names, you’ll need to register that trade name through the South Carolina Secretary of State.
Can I draft a partnership agreement myself in South Carolina?
Yes, you can draft a partnership agreement yourself in South Carolina, although it’s generally recommended to work with a lawyer to ensure that all legal requirements are met.
What should I include in a partnership agreement?
A partnership agreement should include details about the how the business will operate, partner roles, rights, and responsibilities, the partnership’s management structure, and procedures for resolving disputes and dissolving the partnership.
Can I change the terms of a partnership agreement in South Carolina after it’s been established?
Yes, you can update the terms of your partnership agreement at any time, provided all partners approve of the changes.
What happens if a partner dies or leaves the partnership in South Carolina?
If a partner leaves or dies, their interest in the partnership will need to be distributed to the remaining partners or their heirs.
What happens to the partnership’s debts and obligations if it’s dissolved in South Carolina?
If the general partnership is dissolved in South Carolina, the assets are used to pay off creditors first before any remaining profits are distributed amongst partners.
Can I use an online template for a partnership agreement in South Carolina?
Yes, but be especially cautious about the contents as general partnership agreements tend to have unique clauses and considerations based on South Carolina laws.
Do I need to appoint a registered agent for my partnership in South Carolina?
Yes, you’ll need to appoint a registered agent in South Carolina who can receive legal documents and official correspondence on behalf of your partnership.
Can I be both a general partner and a registered agent for my own partnership in South Carolina?
No, the registered agent cannot be a general partner of the partnership.
How do I designate a registered agent for my partnership in South Carolina?
You’ll need to include this information in your Certificate of Partnership or Certificate of Limited Liability Partnership filed with the South Carolina Secretary of State.
What are the benefits of a general partnership over other types of entities like an LLC or corporation?
General partnerships are easy to set up and require relatively little paperwork and fees which are attractive. However, general partnerships require a significant amount of trust between the partners and offer less liability protection.
Are there annual requirements for general partnerships in South Carolina to maintain their licenses?
South Carolina general partnerships do not have a need to pay annual fees or do annual filings.
Can I be personally held liable for business debts my partner incurred without my knowledge?
Although, under most circumstances individual partners participating in the management and operation of the business may be held personally liable for obligations associated with partnership even if they were not specifically aware of the expenses, some legal defenses may be applicable in some cases that an attorney will only be able to elaborate in a punctual scenario.
Can partners working with government-based employee types of jobs start their own side businesses individually or as a small partnership while working for the local or federal government?
In general, government employees can start a business for themselves or can form a small partnership with the right verbiage in order appropriately adapted the employment policies established by the state or federal institution for which they are employees.

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Conclusion

A general partnership can be viable for individuals looking to establish a business in South Carolina with shared decision-making, management responsibilities, and profits. This type of business structure is relatively simple to establish and offers flexibility in operations. However, it is essential for potential partners to carefully consider the unlimited personal liability aspect of general partnerships, which means that each partner’s personal assets could be at risk to cover any debts or obligations incurred by the business. Before forming a general partnership, the partners should have a clear and well-drafted partnership agreement that outlines the roles, responsibilities, profit-sharing, and dispute-resolution mechanisms to ensure a smooth working relationship and minimize potential conflicts. Partners should also explore other business structures, like limited liability partnerships or corporations, to determine the best fit for their needs and goals.

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