Limited Liability Partnership
A limited liability partnership, or LLP, is a partnership where each general partner has equal control over the partnership as he or she would in a general partnership, but is also able to enjoy the limited legal liability that is typically offered by a corporation or limited liability company.
A LLP generally operates like a general partnership, with each partner having equal power to make decisions and bind the partnership. However, unlike a general partnership, a LLP provides each member protection from personal liability beyond the extent of their investment in the LLP. Additionally, partners in a LLP are not responsible for another partner’s debts, obligations, or liabilities resulting from negligence, malpractice or misconduct.
A LLP does have certain limitations. For example, unlike a limited liability company or corporation, a LLP’s owners can only be individuals. However, as a result, a LLP is taxed as a “pass-through” entity, meaning that its profits and losses are reported on the individual partner’s tax returns only and are not subject to “double taxation” like a corporation’s.
A LLP is generally favorable for professional associations, where all the partners in the business have equal ability to control the partnership but are still afforded the liability protections of a corporation. Most states, including the District of Columbia, require a partnership to specifically elect limited liability partnership status and qualify for such status by abiding by the provisions enumerated within the State’s statutes. Understanding each of these provisions is crucial to your companies success.
For more information on Limited Liability Partnerships, please contact Antonoplos & Associates at 202-803-5676 or directly schedule a consultation with one of our attorneys. For general information on our business law practice or how to create a different type of partnership in DC, Maryland, or Virginia, check out our blog.
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