The Uniform Partnership Act governs a South Carolina partnership. A partnership is an association of two or more persons that establishes co-ownership of a business for profit. The existence of a South Carolina partnership depends on the relationship between the parties and whether the parties came together to carry on a venture for their common benefit, each contributed property or services and had a community of interest in the profits of the business venture. A partnership exists if certain conditions are met – regardless of the parties’ intent to join a partnership. For example, if a husband and wife are operating a business together, the business is classified as a partnership and both husband and wife are considered partners and owners of the business unless it is clear from their financial records that one of them is the true owner and the other is simply an employee (in which case the business entity would be a sole proprietorship),
Like sole proprietorships, a South Carolina partnership does not insulate the general partners from the debts and liabilities incurred by the business – they are joint and severally liable. This partnership entity does, however, provide the advantage of a pass-through taxation and provides the partners with the ability to control and establish their relationships with great flexibility. On the other hand, due to liability exposure of each partner, a major disadvantage is that there is the potential for a judgment enforced directly against the partners.
To form a South Carolina partnership, the following steps are required:
- Choose a business name
- File an assumed name
- Draft and sign a partnership agreement
- Obtain licenses, permits, and zoning clearance
- Obtain an Employer Identification Number