Limited Liability Company (LLC) Formation Service

What is a limited liability partnership (LLP)?

A limited liability partnership (LLP) is similar to a limited liability company (LLC) in that all partners have limited liability for business debts, but in many states this liability protection is less than what LLCs receive. Further, some states limit the use of LLPs to professional occupations that require a license to do business.

When is the limited liability partnership business type most commonly used?

The LLP business type is especially appealing to businesses that were prohibited in the past from forming a limited liability company (LLC) or corporation, such as accountants and attorneys.

How are LLPs taxed?

LLPs allow for pass-through taxation as its income is not taxed at the business level, but an informational tax return for the partnership must still be completed. Any income or loss of the LLP as shown on the return is passed-through to the partners’ individual tax returns. The partners must then report the income or loss on their individual tax returns and pay any necessary tax.

How many owners are required to form an LLP?

You must have two or more owners to form an LLP.

Are there any other requirements for LLPs?

LLP requirements vary by state. California and New York limit the use of limited liability partnerships to professionals. In California, the term professionals is defined narrowly to include only lawyers, accountants or architects. Delaware, Georgia, Pennsylvania, Texas, and Virginia require an LLP to carry insurance or an escrow account to cover liabilities.

Several states have a reduced form of liability protection referred to as limited shield. These include Alaska, Arkansas, District of Columbia, Hawaii, Illinois, Kansas, Kentucky, Louisiana, Maine, Michigan, Nevada, New Hampshire, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah and West Virginia.

Do I need an attorney to form a limited liability partnership?

No, you can prepare and file the registration of limited liability partnership yourself or through an online provider like BizFilings, but it’s good to understand the requirements of your intended state of formation. If you are unsure of what business type would be most beneficial for your specific situation, consult an attorney or accountant.

What should I name my LLP?

Choose the name of your LLP carefully. It is very important that your name portray the image you want for your partnership. Legally, the name must not be "deceptively similar" to any existing company in your state and be "distinguishable on the record" of your state.

Because some states only check proposed LLP names against existing LLPs, reserved and active, perform a trademark search to make sure the name you want to use is not already taken by another business type. Also, most states require that the name you select show your business is an LLP, by including the words "Limited Liability Partnership" or the abbreviation of "LLP."

How do I get started setting up an LLP?

After you decide to form an LLP, a registration of limited liability partnership must be filed with that state and initial fees must be paid. After your registration of limited liability partnership is filed, it is recommended that you hold an organizational meeting of the partners where you adopt an operating/partnership agreement, distribute partnership certificates, and complete other preliminary matters, such as authorizing the opening of a bank account for the LLP. BizFilings' Compliance Kit & Seal includes all the information and paperwork to make this process easier.