How to Start an LLP

Save

Limited liability partnerships typically come into play for licensed professionals such as accountants, architects and attorneys. Creating this type of business structure ensures liability protection for one partner from his colleague's actions. However, each partner remains liable for his own actions. Points to consider, beyond each state's filing fees and regulations, include specifying how decisions are made, how the general ownership interest is shared, and how to deal with a partner's exit from the business. For these reasons, an attorney's help is usually required to create an LLP agreement.

Apply to the Proper Agency

Research which agency oversees new business registrations in your state. Indiana residents, for example, go through the Secretary of State's Business Services Division. By contrast, new business owners in Illinois start the LLP filing process with its Department of Commerce and Economic Opportunity. If you're not sure where to start, a simple keyword search such as "LLP register in State X" should lead you to the right place.

Follow All Relevant Filing Requirements

When you know which agency to consult, follow the process spelled out on its website. Download the relevant form and fill out the information that your state requires. Indiana, for example, mandates that you fill out the LLP's name, plus the address of its principal office, the name and address of a registered agent, type of business, and a statement of intent to act as an LLP. To make the paperwork official, you must also obtain at least one partner's signature and pay a filing fee.

Hammer Out an LLP Agreement

After you file the paperwork, schedule a meeting with an attorney who has experience in forming small businesses -- specifically in negotiating partnership agreements. In particular, you'll need to spell out governance issues. For example, any LLP agreement needs to clearly define the proportion of ownership among the partners and spell out procedures for breaking ties. A 50-50 division between two partners may be unwieldy if there's a deadlock. In that case, consider yielding 1 percent to a third person who can cast a crucial tie-breaking vote. Also, spell out payout amounts and schedules if a partner withdraws from the business. Otherwise, the firm could end up paying out a large lump sum when it's not feasible financially.

Related Searches

References

Promoted By Zergnet

Comments

You May Also Like

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!