What Are the Differences between an LLP Company and Partnership


What Are the Differences between an LLP Company and Partnership

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The business structure you choose will have long-term implications, so it's worth taking the time to weigh up the pros and cons. This article explores some of the key differences between an llp company and partnership.

An difference between a partnership and an LLP is an independent legal entity and provides personal asset protection for its members. This means that a creditor can't sue an LLP partner for the debts or litigation brought against the firm, except to recover any capital contribution made by the member. This is a significant advantage of an LLP over a partnership.

However, this does not mean that an LLP is completely insulated from liability. In some states, creditors can still sue an LLP for the negligence or misconduct of any of its owners. This is why it's important to check the laws of each state carefully before deciding on an LLP or any other business structure.

Moreover, LLPs can be dissolved by an agreement between partners or a court order, the mutual consent of the partners, or insolvency of one or more of the partners. A court can also "pierce the veil of limited liability" if it believes that an LLP has been engaging in activities designed to defraud creditors or shareholders.

Generally, an LLP can be formed by filing the relevant paperwork with the state and paying any necessary fees. It is also essential that a partnership agreement is drawn up which clearly sets out management duties, responsibilities and liabilities of each partner. This can be either a joint and several agreements between all the partners or it could be an arrangement whereby certain partners take on less responsibility, such as marketing and financial control.

 

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