Are you thinking about starting your own business? If so, you are probably discovering that there is a lot of preparation to complete. At the outset, you will need to carve out a business plan and identify your market, as this will ultimately assess the financial viability of your idea. Next, you will have to hire employees who can help your business grow and flourish. Additionally, you may want to think about starting an LLP, especially if you are a licensed professional, such as a doctor or a lawyer. A Limited Liability Partnership is often a logical business structure for certain industries, and it can help you and your partners protect your interests.
Partnerships are especially common in the business world. It is often the case that two heads are better than one, and being able to lean on the expertise of your partners can allow your business to excel. In a General Partnership (GP), two or more people go into business together, sometimes with a simple handshake agreement in place. In an LLP, there is a bit more to it, and as you read on, you will learn how this structure can be beneficial to your business
Understanding the Concept of an LLP
In a Limited Liability Partnership, an added layer of legal protection is added to the basic framework provided by a GP. With the concept of “limited liability”, you and your partners can shield your personal assets from legal judgments against your business or specific negligent partners. In other words, if one partner commits malfeasance that results in a lawsuit, they alone will be subject to the judgment. This is somewhat similar to the protection of an LLC, with the exception that an LLP does allow for liability to be focused on specific bad actors.
This approach to liability makes LLPs especially appealing to licensed professionals. Doctors, lawyers, architects, dentists, and psychiatrists tend to favor forming LLPs over LLCs. It is worth noting, in some states, licensed professionals do not have the option to form LLCs and instead must select the LLP structure. LLPs are also not available in all states.
An LLP also receives “pass-through” status from the Internal Revenue Service (IRS). This means that your partnership will not pay taxes on profits generated directly by the business, but rather that money will pass through to the partners who will pay taxes on their personal income. As you can imagine, this is a sizable financial benefit to a business owner.
Starting an LLP Online
To form an LLP, you will need to submit what is called a “Certificate of Limited Liability Partnership” with your state’s Secretary of State office. This document should outline some basic facts about your business and its partners. You will also need to designate a registered agent to receive all government, tax, and legal correspondence on behalf of your business.
At Corporation Center, we can help you form your LLP online. Simply use our easy-to-fill web templates and submit them via our SSL-encrypted web portal. If you would like to learn more, please contact one of our seasoned customer service agents today.