Advantages of a Limited Liability Partnership
Limited liability partnerships (LLPs) combine the shielded liability aspect of corporations with many of the same practices of a partnership, such as direct control. A relatively recent organizational form, LLPs exploded over the early to mid-1990s and are now allowed in every state and the District of Columbia. One of the reasons for this explosion is the myriad of advantages of a limited liability partnership form, including its accessibility, tax benefit and, of course, limited liability.
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Limited Liability
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The primary advantage of a limited liability partnership over a general partnership is that each partner is potentially liable for only the amount of money put into the partnership, and are generally not personally liable for debts.
Right to Manage Directly
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Limited liability partnerships also offer an advantage over the corporate form by allowing partners to directly own and manage business, rather than having to go through a multi-step corporate ownership process as corporations necessarily involve both shareholders and a corporate board.
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Easily Converted Form
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Switching from a general partnership to a limited liability partnership is simple compared to switching to a corporation because contracts do not need to be re-executed and property does not need to be deeded into a new name.
Profits Not Taxed Twice
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Profits from corporations are subjected to "double taxation," whereby the income from the corporation is taxed, as are the profits distributed to shareholders, while partnerships are not subject to this double taxation.
Most Shielding Form
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Some states restrict certain professions, such as attorneys, from forming corporations or allowing free transfer of shares. If a business is in a professional field that is restricted from forming a limited liability company, a limited liability partnership may be the most protective corporate form available in the state.
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