How to Start a Limited Liability Partnership in South Carolina | 2024 Guide

Start a Limited Liability Partnership in South Carolina

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in South Carolina. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in South Carolina, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your South Carolina LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in South Carolina, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and South Carolina General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in South Carolina

To form a limited liability partnership in South Carolina, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Articles of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in South Carolina, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the South Carolina business registry. Ensure that your chosen name follows South Carolina naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with South Carolina Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in South Carolina- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the South Carolina Secretary of State business name database and South Carolina Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of $25 and mail name reservation fee of $25. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by two methods, by mail and in person, which costs around $10. In addition, the DBA’s validity in South Carolina is five years, which you can file in the South Carolina Secretary of State.

You can check out how to file a DBA in South Carolina for clearer understanding.

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Step 3: Designate a Registered Agent

In South Carolina, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or South Carolina Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet South Carolina requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the South Carolina Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the South Carolina Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with South Carolina laws.

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 in South Carolina might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain South Carolina Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN 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-4 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.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain South Carolina Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

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

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your South Carolina LLP. Additionally, obtain the necessary South Carolina Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in South Carolina to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the South Carolina Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, South Carolina, and local levels.

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Advantages of Forming a Limited Liability Partnership in South Carolina

While the specific advantages of forming an LLP in South Carolina can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in South Carolina:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in South Carolina.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in South Carolina may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in South Carolina.

Cost of Forming an LLP in South Carolina

The cost of forming an LLP in South Carolina may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as South Carolina Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in South Carolina instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership (LLP) in South Carolina?
An LLP is a type of business partnership where the partners aren’t held personally responsible for the partnership’s debts and liabilities.
What steps do I need to take to form an LLP in South Carolina?
You need to file a Certificate of Limited Liability Partnership with the South Carolina Secretary of State.
Who is eligible to form an LLP in South Carolina?
At least two partners are required to form an LLP in South Carolina.
How much does it cost to form an LLP in South Carolina?
It costs $110 to file the Certificate of Limited Liability Partnership with the South Carolina Secretary of State.
How long does it take to form an LLP in South Carolina?
It generally takes 7-10 business days for the South Carolina Secretary of State to process the Certificate of Limited Liability Partnership.
What are the advantages of forming an LLP in South Carolina?
The main advantage is that the partners aren’t held personally responsible for the partnership’s debts and liabilities.
Can an LLP in South Carolina have only one partner?
No, an LLP in South Carolina requires at least two partners.
Does an LLP in South Carolina need to have a written partnership agreement?
No, but a written partnership agreement is highly recommended.
What taxes does an LLP in South Carolina need to pay?
LLPs in South Carolina are generally taxed as pass-through entities, meaning the partners pay taxes on their share of the partnership’s income.
How do I dissolve an LLP in South Carolina?
You need to file a Statement of Dissolution with the South Carolina Secretary of State.
Can a foreign LLP operate in South Carolina?
Yes, a foreign LLP can register to do business in South Carolina with the Secretary of State.
Is there an annual report requirement for LLPs in South Carolina?
Yes, LLPs in South Carolina have to file an annual report with the Secretary of State and pay a $15 fee.
Can an LLP in South Carolina be converted to a different type of entity?
Yes, an LLP in South Carolina can be converted to another type of partnership or to a corporation.
Can an LLP in South Carolina change its name?
Yes, an LLP can change its name by filing a Certificate of Amendment with the South Carolina Secretary of State.
How long does an LLP in South Carolina exist for?
An LLP in South Carolina exists until it is dissolved or until a specified date is included in the registration certificate.
What type of liability protection do partners in an LLP in South Carolina have?
Partners in an LLP in South Carolina aren’t held personally responsible for the partnership’s debts and liabilities.
Can an LLP in South Carolina have employees?
Yes, an LLP in South Carolina can have employees.
What type of businesses should consider forming an LLP in South Carolina?
Professionals like doctors, lawyers, and accountants may benefit from forming an LLP in South Carolina.
Can an LLP professional practice be licensed in South Carolina?
Yes, an LLP professional practice can be licensed in South Carolina.
Are there any restrictions on the chosen name for an LLP in South Carolina?
Yes, the name of an LLP in South Carolina must not resemble any other entity’s name on file with the Secretary of State unless you have written support from the holder of an approved name.
Who is responsible for managing an LLP in South Carolina?
It is up to the partners in an LLP to run and manage the partnership.
How many members can an LLP have?
An LLP in South Carolina must have at least two members and no maximum number.
Where do I file the Certificate of Limited Liability Partnership in South Carolina?
You have to file it with the South Carolina Secretary of State on the Statehouse grounds in downtown Columbia.
Are there any restrictions on the partners of an LLP in South Carolina?
There are no restrictions on partners’ residency or citizenship, but they must be people, not companies, or trusts.
What happens if the registered agent for an LLP in South Carolina is no longer available?
If the registered agent for an LLP in South Carolina is no longer available, you need to appoint a new one and file a Change of Registered Agent form with the Secretary of State.
Can an LLP in South Carolina own property?
Yes, an LLP in South Carolina can own property.
What reporting requirements do LLPs in South Carolina have?
LLPs in South Carolina need to file an annual report with the Secretary of State and pay a $15 fee.
How can I withdraw from an LLP in South Carolina?
You can withdraw from an LLP in South Carolina by filing a Statement of Withdrawal with the Secretary of State.
What is the South Carolina Uniform Partnership Act?
The South Carolina Uniform Partnership Act provides the basic legal framework for LLPs and other partnerships in the state.
What is a Limited Liability Partnership?
A Limited Liability Partnership (LLP) is a business structure that protects its partners from being held personally liable for the business’s debts and liabilities.
How many partners can form an LLP in South Carolina?
An LLP in South Carolina can only be formed by two or more individuals.
Can single-member LLPs be formed in South Carolina?
No, South Carolina does not allow for the formation of single-member LLPs.
Is there a minimum capital requirement to start an LLP in South Carolina?
No, there is no minimum capital requirement to start an LLP in South Carolina.
Can a foreign individual or company form an LLP in South Carolina?
Yes, foreign individuals or companies can form an LLP in South Carolina.
Is it mandatory to have a registered agent for LLPs in South Carolina?
Yes, all LLPs in South Carolina must have a registered agent.
Can an individual act as their own registered agent for an LLP in South Carolina?
No, an individual cannot act as their own registered agent for an LLP in South Carolina.
What are the filing fees for forming an LLP in South Carolina?
The filing fee for forming an LLP in South Carolina is $110.
What are the annual reporting requirements for LLPs in South Carolina?
LLPs in South Carolina are required to file an annual report with the Secretary of State and pay a $25 fee.
Can an LLP convert to another business structure in South Carolina?
Yes, an LLP can convert to another business structure in South Carolina.
Are LLPs required to hold annual meetings in South Carolina?
No, LLPs are not required to hold annual meetings in South Carolina.
What are the tax implications of forming an LLP in South Carolina?
LLPs in South Carolina are subject to income tax at both the state and federal levels.
Does an LLP need to have a separate tax identification number in South Carolina?
Yes, an LLP does need to have a separate tax identification number in South Carolina.
Do LLPs need to obtain a business license to operate in South Carolina?
Yes, LLPs must obtain a business license from the city or county where they are operating.
Are LLP partners personally liable for the actions of other partners in South Carolina?
No, LLP partners are not personally liable for the actions of other partners in South Carolina.
Can LLP partners participate in the management of the business in South Carolina?
Yes, LLP partners can participate in the management of the business in South Carolina.
Can an individual be a partner in multiple LLPs in South Carolina?
Yes, there are no restrictions on an individual being a partner in multiple LLPs in South Carolina.
Is there a statute of limitations for lawsuits against LLPs in South Carolina?
Yes, there is a three-year statute of limitations for lawsuits against LLPs in South Carolina.
Can an LLP be legally formed without the presence of all partners in South Carolina?
Yes, an LLP can be legally formed without the presence of all partners in South Carolina.
What are the filing requirements for foreign LLPs wishing to do business in South Carolina?
Foreign LLPs wishing to do business in South Carolina must file a Foreign LLP Application with the Secretary of State.
Can an LLP dissolve voluntarily in South Carolina?
Yes, an LLP can dissolve voluntarily in South Carolina by filing a Certificate of Dissolution with the Secretary of State.
Can a court involuntarily dissolve an LLP in South Carolina?
Yes, a court can involuntarily dissolve an LLP in South Carolina if it is found to be legally deficient.
Can an LLP in South Carolina choose to be taxed as an S Corporation?
Yes, an LLP in South Carolina can choose to be taxed as an S Corporation if it meets certain requirements.
Are LLPs required to pay unemployment insurance taxes in South Carolina?
Yes, LLPs in South Carolina are required to pay unemployment insurance taxes.
Are LLPs required to carry workers’ compensation insurance in South Carolina?
Yes, LLPs in South Carolina are required to carry workers’ compensation insurance.
Can an LLP in South Carolina issue stock to its partners or shareholders?
No, LLPs in South Carolina cannot issue stock to their partners or shareholders.
Can an LLP in South Carolina register as a nonprofit organization?
No, LLPs in South Carolina cannot register as nonprofit organizations.
Is there a residency requirement for LLP partners in South Carolina?
No, there is no residency requirement for LLP partners in South Carolina.

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Conclusion

Starting an LLP in South Carolina may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in South Carolina.

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