Who is liable for the debts of a business?
In South Carolina, the business entity type determines who is liable for the debts of a business. Generally, sole proprietorships, or businesses owned by a single individual, leave the owner unprotected from legal responsibility of the business. This means that the owner is personally liable for the debts of the business, as they are not legally treated as separate entities. Partnerships in South Carolina are treated as hybrids between sole proprietorships and corporations. Like sole proprietorships, they are not considered separate entities and partners are held liable for the debts of the business. However, they may also be held liable for the actions of other partners. Finally, corporations in South Carolina and throughout the United States are legally distinct from the owners. As such, the owners are generally not held liable for the debts of the corporation. This protection does have limits, however. The owners may be held liable for debts of the corporation if they have personally guaranteed the debt or have been involved in fraud or other illegal activities. In conclusion, the liability for a business’s debts in South Carolina depends on the type of business entity. Generally, sole proprietors are held liable for their business’s debts while partners in partnerships may be held liable for the debts of the business and the actions of other partners. Finally, corporations enjoy limited liability and the owners are generally not held liable for the debts of the corporation.
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