What is the Difference Between an LLC C & an LLC P?
An LLC C (LLC) is a limited liability company; while an LLC P (LLP) refers to a limited liability partnership. They are both limited liability company structures offering similar rules and procedures.
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Origination
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LLCs and LLPs are created in the same way by filing articles of organization in the state they are located. These articles describe things such as business name, address, contact information and a description of the business's activities.
Legal Protection
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LLCs and LLPs offer the same liability protection for owners. LLCs have members; while LLPs have partners. Both members and partners of these business structures are considered owners of the company and both have limited liability in the business. This means that if the company is involved with financial hardships, owners' personal assets cannot be touched, they are protected. Only business assets are at stake.
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Tax Aspects
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All profits made through an LLC or LLP are passed through to its owners. Members or partners therefore recognize profits on their individual tax returns.
Differences
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LLPs are prominent in certain professions such as accounting firms and lawyer firms. The reason is because LLPs offer limited liability between partners. If a law firm, if one lawyer is sued for negligence, the other partners in the business are not liable. Each partner is separate. LLCs are not like this. All members are responsible for company failure; there is no separation.
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