Learn more about what a limited liability partnership is, and why it may be right for you.
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If you are a new or aspiring small business owner, you may have come across the term “limited liability partnership.” But what is a limited liability partnership, and how does it differ from other types of legal business entities?
Use our guide below to learn more about limited liability partnerships and see how we can help you with your business needs.
A limited liability partnership (LLP) is a type of business entity structure. At its core, an LLP is a type of partnership composed of two or more individuals who agree to run a business together.
In a general partnership, all partners of the business are typically liable for the debts and liabilities of the business and the other partners. However, the cornerstone characteristic of a limited liability partnership is limited personal liability. Thus, in an LLP, while partners are still responsible for the overall liabilities incurred by the business, they are generally not liable for the errors and omissions of their fellow individual partners.
Notably, there are several business entity structures you can choose from. Thus, a limited liability partnership may not be the right structure for all businesses. Some other common business entity structures include:
If you’re still not quite sure that an LLP is the way to go, that’s okay. Be sure to speak with a legal professional in your state to discuss these other types of legal entity structures to determine whether an LLP is suitable for your business’s needs and goals.
Below are some common types of businesses that are frequently formed as LLPs:
No matter what type of business you plan to start, a limited liability partnership can be a great option to consider.
There are a number of advantages to setting up your small business as a limited liability partnership. For example, the key advantages include:
With benefits like these, an LLP can be advantageous depending on what type of business you want to run.
Importantly, there may also be some disadvantages to consider. Below are some disadvantages of forming an LLP:
Despite these disadvantages, an LLP may still be the way to go depending on your particular facts and circumstances. Check out our other small business resources or speak with a business lawyer in your state to learn more about LLPs and see whether forming one makes sense for your business.
A limited liability partnership is a type of business entity structure with at least two partners. A distinguishing characteristic of an LLP is limited personal liability, which can be extremely beneficial in running a business.
Be aware, however, that LLP rules vary from state to state. Thus, make sure to consult with a professional in your state before deciding whether this is the proper structure for you.
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Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.