​Limited Liability Company (LLC) vs. Limited Liability Partnership (LLP)

Limited Liability Companies vs. Limited Liability Partnerships Similarities Between 1 LLPS and LLCS Both provide liability protection of personal assets Both require you to file formal documents with the Secretary of State Both require Employer Identification Numbers, Registered Agents, unique names and business bank accounts Both can be formed by two or more рeople Both have "pass-through" TAX taxation structures Differences Between LLCS and LLPS Choose an LLC LLP An LLC can be formed by An LLP and multi-member one person (single-member LLC); an LLP cannot be formed by one person. LLCS are required to file a 1065 Partnership tax return. Single-member LLCS do not. Requirements to Form an LLP 3 An LLP must have two Some states only allow certain types of professions or more people as partners in the business. to form an LLP. LLPS are normally formed by groups of qualified professionals like lawyers, accountants or architects. Benefits of an LLP 4 Flexible management Easy to assign partner roles, responsibilities and profit shares structures and risks can be spread between partners Can enhance the reputation and name of a professional Easy to add and remove partners services business from the business Should You Form an LLC or an LLP? An LLP has some unique advantages that can make it a better fit for certain types of businesses. Most business owners that are not operating a professional services firm are probably better advised to form an LLC instead. incfile