South Carolina law regulates how a Limited Liability Partnership, or LLP, may form, operate, and ultimately dissolve. Unlike limited partnerships or general partnerships where one or more partners are personally liable for the debts of the business, an LLP limits liability for all partners. Each partner may participate in the management of the business, and receive a portion of the profits.
Basic LLP Requirements
A South Carolina LLP may be formed by two or more people in any profession, and must be registered with the state. South Carolina requires that LLPs have at least two partners. Partners in an LLP are not liable for the debts of the business. If the LLP is sued, or goes bankrupt and cannot pay its debts, the partners are not personally liable for the debt. Further, all LLPs must include, "Registered Limited Liability Partnership" or the abbreviation "L.L.P." as the last words or letters of its name.
To form an LLP, you must file a Application for Registration of a Limited Liability Partnership with the South Carolina secretary of state. When forming the LLP, you must designate a registered agent who resides in the state and will be responsible for accepting all legal documents on behalf of the partnership. On the certificate, you must include the name of the partnership, a statement of the business the partnership is involved in, the address and name of the registered agent, and the number of partners. The form must be signed by a partner, and include the appropriate filing fee.
An LLP may, but is not required to, create a partnership agreement to provide how the partnership will be managed. The agreement may provide much each partner has contributed to the business, any plans for additional contributions, each partner's right to distributions of profits, and any events which would close the partnership. Creating a partnership agreement at the time of formation will prevent conflict further down the line.
South Carolina requires LLPs to carry at least $100,000 of liability insurance. Additionally, if the LLP is a professional organization, such as an accounting firm, the partnership may be required to hold additional professional liability insurance.
An LLP will dissolve at the time specified in the partnership agreement, or when all the partners agree to close the LLP. The partnership will not necessarily close merely because one partner leaves, unless the partnership agreement provides otherwise. An LLP will automatically dissolve one year after initial registration if you do not file a renewal application.