If you’re looking to start an accounting firm, then you’re probably wondering what’s the best alternative for the company. So, can an accounting firm be an LLP or LLC? Let’s find out.
Can an Accounting Firm be an LLP or LLC?
When it comes to deciding between an LLP and an LLC for your accounting firm, you will need to consider the benefits and responsibilities that come from both types. Here is a brief breakdown of both kinds of companies so that you are able to make an informed decision on the matter. If you have any other questions on the matter, like “Can an accounting firm be an LLP or LLC” feel free to reach out to our team for help.
Why Get an LLP?
An LLP, short for limited liability partnership, is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. Therefore, it can exhibit elements of partnerships and corporations. In an LLP accounting firm, each partner will not be responsible or liable for another partner’s misconduct or negligence, which means that some or all partners have a form of limited liability similar to that of the shareholders of a corporation. Unlike corporate shareholders, the partners in an LLP have the power to manage the business directly. So, can an accounting firm be an LLP or LLC? In California, as well as some other states, LLPs are open to accounting firms due to their structures, so keep this in mind as a potential path to establishing your accounting firm.
Why Get an LLC?
On the other hand, an LLC, short for a limited liability company, has a business structure that combines the titular limited liability of a corporation with the pass-through taxation that’s characteristic of partnerships and sole proprietorships. Because of this, an LLC is not a corporation under state law, but rather a legal form of a company that, in turn, provides limited liability to its owners in accordance with their jurisdictions. This is important because not all states allow licensed professionals, including accountants to structure their practice as an LLC, since many states insist professionals have personal liability in case of malpractice. Because of this, you will want to look into other options when it comes to establishing your accounting firm in order to not get into any legal trouble down the line. Our team can help you assess your options.
Let the Corporation Center Help
Getting a company started is already a huge endeavor and a commendable initiative on your end. Because of this, we want to make sure to provide as much help as we can on our end. This starts with providing you with all the forms and applications needed if you wish to carry out the starting process the right way. All the forms you might need, regardless of what state you’re in, can be found on the Corporation Center website for your convenience. If you need any help at some point in the process, don’t hesitate to reach out to our team. We’re ready to guide you through this!