There are a few advantages that make a limited partnership more attractive than a general partnership. Maybe the most important is that partners are shielded from most liability in a limited partnership. It is also a business structure that can take investors and allows partners to be replaced or leave without dissolving the business entity.
While in a general partnership, partners are equally liable for all business claims and debts, in this case partners are only liable in the limit of the capital they have invested in the business.
Creating a limited partnership takes a few steps, but with our help and professional services it becomes and extremely easy process. After creating the LP, make sure to draft a written limited partnership agreement with the details of your partnership.
LLP (Limited Liability Partnership)
A distinctive characteristic of the limited liability partnership (LLP) is that while all partners have authority in managing the business and are sharing the responsibility, they are not personally liable for business debts or claims. It is a business structure preferred by professionals and business partners, although there are states where only certain categories of professionals are allowed to form limited liability professionals.
Similar to general partnerships, LLPS are considered “pass through” business entities and taxed as such. Any profit or loss the LLP registers is passed through to the partners and taxed on their personal returns. While limited liability partnerships do not pay taxes directly, in some states they need to pay an annual franchise tax on the partnership.
Even if they have similar names, the two are distinctive business structures. The main differences come from the number of partners and members and ownership transfer. While LLPs need to have at least two partners, an LLC can have only one owner. If you need the possibility of easy transfer of ownership, then an LLC is the better business structure for you. As for management particularities, while an LLP is usually managed by all the partners, the day-to-day activities of an LLC are generally managed by designated managers.