Starting your own business is an inherently risky proposition. Even building up the necessary courage to leave your 9-to-5 in the name of starting your own venture is not easy. While it certainly is a gamble in many ways, entrepreneurship can also be uniquely rewarding. Having the opportunity to put your years of expertise into your own project can offer an unparalleled degree of professional fulfillment. One way that some business owners choose to mitigate risk is to form a Limited Liability Partnership (LLP). When you set up an LLP, you get to combine your experience with like minded professionals while building your own enterprise.
Businesses can take a variety of different legal structures. For example, there are General Partnerships (GPs), Limited Liability Companies (LLCs), and corporations, to name a few. While there are some commonalities and overlap, generally speaking, each structure is tailored to a certain type of business. Read on to learn more about the benefits of starting a Limited Liability Partnership, as well as how you can form yours online at Corporation Center.
What Is a Limited Liability Partnership?
In your time in the business world–or even as a consumer–you have probably seen the three letters “L.L.C.” following the names of businesses or organizations. Limited Liability Companies are incredibly common and popular, and a Limited Liability Partnership is sort of a cousin to that formation. In an LLP, partners enjoy the concept of limited liability. This means that in the event that one partner commits malpractice or some other type of malfeasance, the other partners cannot be found liable. In other words, if your partner commits an egregious professional error, you do not need to worry about losing your house in a lawsuit.
In some ways, an LLP is an advanced version of a General Partnership, or a GP with an added layer of legal protection. A GP is essentially the occasion of two or more individuals going into business together–that’s it. A GP can sometimes be consummated with a handshake or verbal agreement. An LLP is a bit more formalized, and as such, affords partners a higher degree of protection.
The Tax Benefits of an LLP
There is also a sizable financial incentive to forming your own LLP. Much like an LLC, an LLP has what is called “pass-through” status with the Internal Revenue Service (IRS). This means that any profits generated through your partnership are not taxed until they pass through to the individual partners. To put it another way, you and your partners will only pay taxes on your individual salaries.
LLPs are not available in every state. They are popular among licensed professionals like doctors, lawyers, and architects, and in some states, such professions are required to form LLPs (this is true in California and Nevada).
Set Up an LLP Today
If you would like to set up your own Limited Liability Partnership, why not work with us? We have streamlined, easy-to-read forms that allow you complete your documents quickly and efficiently. If you would like to learn more, email or call one of our customer service agents today.