Form Your Limited Liability Partnership (LLP)
In some states, only professionals (required to have licenses to do business) are allowed to form a Limited Liability Partnership and, in addition, some states have special insurance requirements. Limited Liability Partnerships are similar to LLC’s. While partners are personally liable for their own negligent or wrongful acts when performing services for the partnership, they are protected by their limited liability from any personal liability for the acts of others as well as the debts and business obligations of the business although in some states this protection is less than the protection they would receive under LLC’s or corporations. Protection of partners’ personal assets is one of the major advantages of an LLP.
Why Form an LLP?
While an LLC or S Corporation is likely a better choice, some businesses previously prohibited from forming those forms of business now select a Limited Liability Partnership to avoid the higher cost of transferring from an existing general partnership to an LLC or S Corporation.
MaxFilings can help you form your LLP.
Some Points to Consider When Forming an LLP
- Some states allow only professionals who must have licenses to do business to form a Limited Liability Partnership
- Official documents must be filed with the appropriate state in order to form a limited partnership and state filing fees must be paid
- Limited Liability Partnerships are similar to LLC’s
- Partners enjoy limited liability and are not liable for the debts, obligations and liabilities of the partnership although this protection is less is normally enjoyed in LLC’s or corporations
- Protection of limited the partners’ personal assets is one of the major advantages of a limited partnership
- Partners are held personally liable for their own negligent or wrongful acts when performing services for the partnership
- Partners are not liable for the negligent or wrongful acts of others in the partnership
- There is less paperwork and limited liability partnerships are easier to manage than are corporations
- Limited liability partnerships are not themselves taxed so partners can enjoy pass through taxation as do other partnerships
- Losses can sometimes be used to shelter partners’ other income