LIMITED LIABILITY PARTNERSHIP (LLP)
WHY CHOOSE A LIMITED LIABILITY PARTNERSHIP (LLP)
Typically only business owners in professions that require a state license in order to practice, such as accountants, architects, attorneys, chiropractors, doctors, dentists, etc., are allowed to form LLPs. An LLP is similar to an LLC: all partners have limited liability for business debts, but be aware that in many states the protection of limited liability partnership are less what LLCs or corporations receive.
ADVANTAGES OF LIMITED LIABILITY PARTNERSHIPS WITH LLP FORMATION, TYPICAL ADVANTAGES INCLUDES:
Limited liability protection. Partners are not held personally responsible for business debts and liabilities (the limited liability partnership does not protect against liability for partners’ actions, however).
Pass-through taxation. No tax is paid at the business level. Profits or loss are reported on the partners’ tax returns, and any tax due on business income is paid at the individual level
Conversion from general partnership. LLPs typically offer easier conversion from a general partnership to an LLP than to a LLC or corporation.
Flexible management. Partners have more flexibility in management structure and can determine which partner are responsible for the day-to-day operations.
Few formal requirements. A limited liability partnership has fewer formal requirements and annual paperwork than corporations.
HOW IS AN LLP FORMED?
In order to register a business as an LLP, formation documents must be filed with the appropriate state agency, and necessary filing fees paid. LLP Key Benefits Unlike the limited partnership (LP) all partners in a limited liability partnership are typically not personally responsible for the debts and liabilities of the business or practice. LLPs more closely resemble LLCs in that regard; however, LLPs are often required to have insurance policies to cover personal liability. Compare Types of Types of Business Structure.
KEEP IN MIND
Most states restrict the business type that professional service businesses (such as accountants, attorneys and doctors) can take. The limited liability partnership (LLP), the professional corporation (PC) and the professional limited liability company (PLLC) are the options, but the (PLLC) are the options, but the PLLC is not allowed in all states.