A limited licensed partnership, or LLP, is a business model that allows any partners in the business to manage it. Each partner takes on some of the responsibility when it comes to tax benefits and liability. Some professions, including medical, legal, architecture, accounting and engineering benefit from operating as an LLP. Formation varies based on the state you choose to form your LLP in, but there are some general steps you can take, regardless of where you’re located. Keep reading to find out what steps are necessary in forming an LLP.
Verify That You Qualify
In some states, there are limits on what kinds of businesses can form and operate as a limited liability partnership. That means that in some locations, only a professional company qualifies to run as an LLP. You should also take the time to verify what limitations you may face if you form as an LLP in a specific state.
Name Your Business
It’s important to choose a name for your business that isn’t being used by any other company. Some business owners choose to name their company after themselves, while others opt not to. Either way, it’s a good idea to start by doing a search on your state’s Secretary of State database to determine if the name you’re considering is already being used. Some states also place restrictions on specific words or terms, which you won’t be able to use as a name for your business. You should also make sure your business name isn’t protected by any trademarks. Many states also require part of your name to include the term “LLP.”
Create an LLP Agreement
This is not always required in every state, but if you still wonder what are the necessary steps in forming a LLP, this is highly recommended. This agreement lays out each partner’s duties and liabilities, as well as their responsibility to the business. The agreement should also include information like financial contributions, profit and loss, any information about buyouts, and guidelines for taking on new partners.
Hire a Registered Agent
This is a requirement of most states. Having a registered agent means someone authorized to work in the state in which your LLP is formed. That person can accept mail and handle legal matters for the business. A registered agent must have a physical address in the state where the LLP is formed.
File an LLP Certificate
This is a mandatory step, no matter what state you reside in or what state you form your business in. This step involves filing your business information, including contact data, partners’ information, etc.
Obtain Numbers, Licenses and Permits
Now you’ll obtain your Employee Identification Number, state ID number and any licenses or permits you need to operate your business. This is also the time to obtain insurance and manage your publications related to the company.
Operating an LLC is beneficial for many fields, but going about the process correctly is important for making sure all the boxes are ticked along the way. Contact Corporation Center today and we’ll help with the question you may have:what steps are necessary in forming an LLP.