South Carolina at a glance
Partnership law
UPA (original)
LLC default split
Proportional to capital
Operating agreement
Not required
Community property
No
Formation cost
$110
Annual cost
No annual report fee
South Carolina does not charge an annual report fee for LLCs, making ongoing maintenance affordable. The state still follows the original Uniform Partnership Act (UPA), meaning a partner's departure automatically dissolves the partnership.
Default partnership rules in South Carolina
South Carolina follows the original Uniform Partnership Act (UPA), not the revised version. Under UPA, partnerships are treated as an aggregate of their partners. A partner's departure, death, or bankruptcy automatically dissolves the partnership. Profits and losses are shared equally by default. Partners are jointly and severally liable for partnership debts. Written partnership agreements with continuation clauses are essential in South Carolina.
The most important takeaway: profits are split equally by default in South Carolina, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including South Carolina.
LLC defaults in South Carolina
South Carolina allocates LLC profits and losses in proportion to capital contributions by default. An operating agreement is not required. The state does not charge an annual report fee, keeping ongoing costs very low.
South Carolina defaults to proportional distributions based on capital contributions, which aligns better with many founders' expectations than equal-split states. However, capital contributions alone rarely tell the full story. A founder contributing time and expertise may receive nothing if they didn't invest cash. An operating agreement can account for all types of contributions. Our equity calculator can help you determine a fair arrangement.
What happens when a partner leaves in South Carolina
Under South Carolina's UPA, a partner's departure automatically dissolves the partnership. The remaining partners must wind up the partnership's affairs before reforming if they wish to continue. This automatic dissolution makes written partnership agreements with continuation clauses especially important.
Important: Because South Carolina follows the original UPA, a partner's departure automatically dissolves the partnership. This is a significant risk that can disrupt the business, alarm creditors and clients, and create tax complications. A written partnership agreement with a continuation clause is essential for any South Carolina partnership with more than one partner.
Marriage and business equity in South Carolina
South Carolina is an equitable distribution state. Business interests acquired during the marriage are marital property and divided equitably in a divorce.
Even though South Carolina is not a community property state, marriage can still affect your business equity. In equitable distribution states, courts divide marital property based on what is fair, which may include business interests acquired or grown during the marriage. A clear equity agreement and proper documentation of ownership can help protect your business in the event of a divorce.
Formation and cost considerations in South Carolina
| Formation cost | $110 |
| Annual/recurring cost | No annual report fee |
| State income tax | Yes |
| Partnership law | UPA (original) — partner departure dissolves the partnership |
| LLC default distributions | Proportional to capital contribution |
| Operating agreement | Not required (strongly recommended) |
Frequently asked questions
Does South Carolina charge annual fees for LLCs?
No, South Carolina does not charge an annual report fee for LLCs. The only cost is the $110 formation fee, making it one of the most affordable states for ongoing LLC maintenance.
What is the default LLC profit split in South Carolina?
South Carolina defaults to proportional allocation based on capital contributions. An operating agreement can establish a different arrangement.
Does South Carolina use UPA or RUPA?
South Carolina still follows the original Uniform Partnership Act (UPA). A partner's departure automatically dissolves the partnership. Written partnership agreements with continuation clauses are critical.
Does South Carolina require an operating agreement?
No. Without one, the state's default rules apply. A written operating agreement is recommended for all multi-member LLCs.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Partnership laws in neighboring states
Disclaimer: This page provides general information about South Carolina partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in South Carolina for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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