What Is a Limited Liability Partnership?
An LLP is a common business structure for professionals such as attorneys, accountants, and architects.
In states where professionals cannot register an LLC, an LLP can provide limited liability with fewer formalities than a corporation.
An LLP combines the advantages of a partnership with the benefits of a corporation.
Generally speaking, partners in an LLP are shielded from debts, obligations, and liabilities resulting from another partner's negligence, malpractice, or misconduct.
As with any partnership, the individuals involved have agreed to run a business together under the terms of a partnership agreement.
Partners are not employees but rather invest in the company and take money as distributive shares instead of salaries.
What Are the Advantages and Disadvantages of a Limited Liability Partnership?
As with any entity type, there are advantages and disadvantages to running a limited liability partnership.
Before starting a business, you need to be well aware of those factors, so you know what to expect and what troubles you could run into.
- Liability protection. Individual partners are protected from the negligent acts of other partners in an LLP. In addition, individual partners are not personally liable for partnership debts.
- Flexibility. LLPs offer flexibility in terms of business ownership. Managerial duties can be separated based on experience, as partners have the authority to decide how they will contribute to business operations. Partners with financial interest may also elect not to have power over business decisions, while maintaining ownership rights based on their percentage interest in the business.
- Tax advantages. Partners who have limited interest in the company will benefit from the tax advantages afforded by the LLP structure, as partners are liable for filing personal income taxes, self-employment taxes, and estimated taxes on an individual basis.
- Not recognized in every state. While general partnerships are recognized nationwide, LLPs are not recognized as a legal business structure in every state. Some states that do allow the formation of LLPs limit the formation to professionals like doctors or lawyers.
- One partner can bind the other. Individual partners are allowed to enter certain business agreements without consulting the other partners. This is why it is crucial for the creation of a partnership agreement that establishes what each limited partner can and cannot do when making business decisions.
- Special tax considerations. In some states, taxing authorities recognize limited liability partnerships as non-partnerships for tax purposes. This may be a disadvantage for partners who require special tax consideration.
Appointing a Registered Agent as an LLP
Limited liability partnerships are formed in the state where the partners conduct business.
In addition to creating a partnership agreement and registering as an LLP with the state, the partners must appoint a registered agent.
A registered agent is a business's legal appointee to receive notice of lawsuits and other legal or government notices during regular business hours.
State law requires every LLP to have a registered agent. A registered agent must have a physical office address in the state where you conduct business.
The documents they collect are often time-sensitive, so choosing a reliable registered service agent is essential.
Harbor Compliance is a nationwide registered agent provider. We support your company as it grows, offering local offices with same-day document scanning.
Easy online ordering means you have service in minutes. View our service page or contact us for more information.
Get Help From Harbor Compliance
Harbor Compliance registered agent service provides the forms and filing instructions for your LLP.
When you work with us, you are immediately granted online access to a registered agent address, and you can expect same-day delivery of your documents.
While we handle the registered agent element of your business, you can focus on meeting your goals and expanding your limited liability partnership.