A limited liability partnership (LLP) is a general partnership that elects to be treated as an LLP by registering with the Secretary of State. Many attorneys and accountants choose the LLP structure since it shields the partners from vicarious liability, can operate more informally and flexibly than a corporation, and is accorded full partnership tax treatment. In a general partnership, individual partners are liable for the partnership’s debts and obligations whereas the partners in a limited liability partnership are statutorily provided protection from partnership liabilities, debts and obligations. It allows the members of the LLP to take an active role in the business of the partnership, without exposing them to personal liability for others’ acts except to the extent of their investment in the LLP.
A LLP must register by filing a written statement with the state’s secretary of state or similar office (along with a filing fee) usually setting forth the name and principal office address, name and address of its agent for service of process, a brief statement of the partnership’s business, the federal employer identification number of the partnership, and a statement that the partnership is registering as a limited liability partnership. Generally, the name of every partnership filing must end with the words registered limited liability partnership, limited liability partnership or the abbreviation LLP.
The limited liability partnership agreement defines the operating procedures of the LLP. Meetings may be required depending upon state law. Partners are entitled to call for an accounting or inspect the financials of the limited liability partnership.
- All partners have limited liability protection;
- All partners receive partnership tax treatment; and
- Management structure is more streamlined than a corporation.