When you are structuring a business, there are multiple different pathways that you can pursue. A sole proprietorship, LLC, S-Corp, C-Corp, or forming an LLP are all potential options. The structure that you ultimately decide on will be dependent on a number of factors and considerations. You will want to think about your industry, your partners, your tax needs, as well your state’s laws on the matter. If you have determined that an LLP–a limited liability partnership–makes the most sense for your entrepreneurial aspirations, you may want to learn more about what steps are necessary in forming an LLP.
In many ways, an LLP stands apart from other business structure options. Still, it is fundamentally something that is built on the concept of partnership. If you are going into business with one or more other people, you can hardly be blamed. Not only can sharing responsibility alleviate some of the considerable stress that comes with owning and operating your own business, it can also help you grow an organization with others that share your vision. To learn more about starting an LLP, read on.
Are You Eligible for Forming an LLP?
Before beginning the process of establishing a limited liability partnership, you should first check to see if you are eligible to do so. Unlike limited liability companies (LLCs), LLPs are not available in every state (they are offered in 40, currently). In the states that do offer them, they are not always available to all types of business. With all of this mind, it is prudent to understand the laws in your local jurisdiction.
It is also worth noting that LLPs are better suited for certain lines of work. Dentists, architects, doctors, and lawyers often opt for LLPs because of how they navigate liability. In an LLC, all members can be shielded from the liabilities that result from lawsuits and incurred debts. In an LLP, there is still the concept of “limited liability”, but individual partners can be found liable in the event that they have demonstrated negligence. In simpler terms, one bad actor cannot take down your entire business.
Because of the specific liability protections that are imposed on LLPs, some states actually require licensed professionals to form them instead of LLCs. In the early stages of your business planning, you may wish to consult with an attorney who is well-versed on these laws.
Completing the Necessary Paperwork
If you have completed the proper amount of due diligence and have settled on establishing an LLP, there will be paperwork to complete. Different states will have different specific requirements, but it is basically universal that you will need to submit a registration form to your local Secretary of State’s office.
This form will typically ask for your name and address, the names and contact information of your partners, the physical location of your business, and a registered agent. A registered agent is the individual who will be tasked with being served legal process documents. Not all states require a registered agent, but it is generally a smart business practice to task a partner with this role.
Taking Care of Tax Matters and Obtaining Permits
On top of creating a partnership agreement, filing your LLP registration, and signing a lease on office space, there are some other logistical matters to consider. You will want to register your business with local, state, and federal tax authorities. The Internal Revenue Service (IRS) will grant you an employer identification number (EIN), which is required of businesses with more than one employee.
You should also make sure that you have all of the necessary licenses and permits that your business needs to operate legally. While every state is different, it is compulsory that you understand your local laws and stay current on this area of documentation. This can save you the potential headaches of costly legal action down the road.
File Your LLP Registration Online at the Corporation Center
If you believe you have all of your ducks in a row and are ready to register your LLP, you have a couple of options for how you can proceed. You can contact your Secretary of State’s office to obtain a blank form, fill it out in ink, and return it to them via mail. Let’s face it, though: you are probably much too busy for that sort of process.
At the Corporation Center, we are a private service that aims to help busy entrepreneurs like yourself. We offer simple-to-fill web forms for LLP registrations and much more. Take a moment to browse our site–you will see that we offer helpful services in all 50 states. We also utilize an SSL-encrypted web portal, so you can rest easy knowing that your data is securely transmitted. To learn more, contact one of our service representatives today.