Limited Liability Partnership

A limited liability partnership (LLP) is similar to an LLC in that the LLP provides limited liability and partnership tax treatment for the partners. It is also much like a general partnership except that it must be formally created by registering with the state. A general partnership can usually become an LLP by registering, and actually, there are few disadvantages in doing so other than an annual fee.

LLPs are now recognized in every state, although some states (California, New York, Nevada, and Oregon) only permit them for professional groups such as lawyers and accountants.

Some features of LLPs include:

• Personal liability of the owners: In a LLP, each partner is liable for the debts of the partnership, but not for acts of professional negligence or malpractice committed by the other partners.
• Taxation: No tax at the LLP level.
• Business formation: State fillings required.
• Membership rules: Unlimited number of partners allowed.
• Management: Each partner has an equal voice, unless otherwise arranged.