LLP Vs. General Partnership
Starting a business with someone else can make things easier on you as a business owner. You can divide the responsibility and lower your personal financial investment. When setting up a new business, you could choose between using a general partnership arrangement or a limited liability partnership. While these types of partnerships are similar, there are a few key differences between them.
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General Partnership
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A general partnership is an arrangement between multiple partners in a business in which each partner carries an equal portion of ownership and responsibility in the business. Each partner is equally responsible for all of the debts incurred by the business. If the partnership is sued, each member of the partnership will be held liable equally. General partners can also sue each other after the entity is sued if they believe that one partner was more responsible than the other for a debt.
Limited Liability Partnership
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A limited liability partnership is a type of partnership in which the partners can gain limited liability for themselves. With this type of partnership, the partners do not have to worry about the actions of the other members of the partnership. For example, if one partner engages in some form of malpractice and gets a lawsuit filed against them, the other partners do not have to worry about being included in the lawsuit or paying any damages.
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Professionals
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When it comes to using a limited liability partnership, some states require that the members of the group be professionals. For example, if you do business in one of these states, your group has to be comprised of doctors, lawyers, accountants, dentists, architects or some other professional. To determine if you have to be professional to start one of these entities, you need to check with your state laws before moving forward with the process.
Getting Started
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When you want to start a general partnership, you do not have to register any business entity or do anything special. You simply start working with a partner and engaging in business practices. By comparison, if you want to set up a limited liability partnership, you will have to complete the necessary documents at the state level. Each state requires you to fill out some paperwork and pay a filing fee before you can be qualified as a limited liability partnership. If you do not want to go through the process of setting this up, the general partnership may be the better option for you.
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