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What is a limited liability partnership?

On Behalf of | Aug 26, 2019 | Partnership Agreements And Disputes |

When you start a business in Texas, you have many options as to its structure. Even once you decide on a partnership between you and one or more other individuals, you still have a variety of options available. The most common options are a general partnership and a limited partnership, each of which has its own advantages and disadvantages. According to FindLaw, however, you also have a third option, the limited liability partnership, which combines some of the advantages of each of the two other types of partnerships. 

One of the major advantages of an LLP is that if you already have an existing partnership, you do not need to modify the partnership agreement already in place. Once you have identified the appropriate state agency, all you have to do is to register as an LLP by submitting your application. The application requirements vary somewhat by state, but at the very least, you will have to disclose your place of business and each of the partners’ names. 

Once you have registered as a limited liability partnership, neither you nor your partners will be personally liable for paying business-related debts or obligations. In other words, if your business incurs debts, creditors will not be able to go after your personal assets to satisfy them. If one of your partners should engage in wrongdoing, you will not be liable for their actions because of the protection the LLP affords you. At the same time, you and your partners will be able to take advantage of the pass-through taxation rules that apply to general partnerships. 

The information in this article is not intended as legal advice but provided for educational purposes only.