A limited liability partnership (LLP) is similar to a limited partnership (LP) except it does not require a general partner (GP). An LLP requires filing an application to register an LLP with the Secretary of State.
Income that you receive as a limited partner is taxed as an individual (no double taxation like a corporation).
See a CPA/tax consultant for tax ramifications of starting your business as an LLP.
Liability of Limited Partners
The limited partners are not liable for the debts and obligations of the LLP. However, they are liable for their own torts.
- Relatively Easy to start
- File the application with the Secretary of State.
- Low initial start-up costs
- LLP Application, business licenses, and fictitious name statements can be relatively inexpensive. Please see your local jurisdiction for actual costs.
- Limited Alienability
- Selling or exiting your LLP is difficult because you are your business (i.e. no shares to exchange as in a corporation).
- Limited Ways to Grow Your Business
- Because you are your business many investors are unwilling to invest in an LLP because they may not get a return on their investment (due to the lack of alienability ownership interest). Therefore, you are usually restricted to debt to grow your business
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