Limited liability partnerships is a form of partnership that operates like a limited liability company with some important differences. Learn how to organize and manage limited liability partnerships.
Limited liability partnerships are covered in Article 9 of the (Revised) Uniform Partnership Act (RUPA).
LLPs are a close cousin to LLCs. They both benefit from pass-through taxation and avoid double taxation of business profits.
LLPs often organized by professional services firms, such as accountants, architects, and lawyers. Partners remain individually liable for their actions. In an LLC, no personal liability passes to the individual members as a general rule.
After you form a limited liability partnership, you must maintain it to keep it in compliance. Track the following information for a limited limited partnership:
This table summarizes the types of partnership documents and filings:
|Organizational filings||at formation||No|
|Partnership agreement||at formation||No|
|Partnership tax returns||ongoing||No|
|Capital account||at formation||No|
Management and ownership structures depend on the partnership agreement, type of partnership, and state law.
LLPs can create a flexible management structure, including a Board of Directors. This is not a requirement, but larger LLPs often choose to manage the partnership with a subset of the entire partnership.
Here is the information to track for officers and directors:
Please note that a person can have two different roles with very different terms of service.
Ownership interests are called "partnership interests". You should capture the name of the owner and the percentage of ownership at a minimum.
To preserve the benefits of your legal entity, effective ongoing maintenance is critical.