Like a General Partnership, Limited Liability Partnerships permit management rights to partners. While these management rights aren’t afforded to Limited Partners in an LP, an LLP allows partners to enjoy the liability protection and tax benefits of a Limited Partnership.
LLPs are particularly beneficial to firms engaged in the legal, medical, accounting, engineering or architectural professions. A partner in an LLP is personally liable for his/her own debts and obligations resulting from negligence, malpractice or misconduct. However, they are not liable for any debts or obligations of his/her partners.
Like Limited Partnerships, LLPs also avoid “double taxation.” They are not taxed at the business/corporate level and instead are “passed through” to only be reported on their personal tax returns.
Limited Liability Partnerships are regulated at the state level, and as such, the process to LLP formation varies. There are, however, basic steps that all states require to form a Limited Liability Partnership. Follow along as we guide you through these steps.