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Forming an LLP

It is commonly known that in order to limit one’s personal liability when it comes to business, one should form a corporation. For many small businesses, however, corporations have too many requirements. An alternative is the limited liability company (LLC) which is simpler and has many advantages over a corporation or sole proprietorship. But it is not always possible for a business entity in certain disciplines to form an LLC, such as lawyers or accountants. In those cases, a limited liability partnership (LLP) may be the way to go.

A limited liability partnership (LLP) is not precisely formed in some states. Sometimes, there must already be a general partnership (GP) or limited partnership (LP) in place in order for an LLP to be registered. Once the registration is complete, members of an LLP are no longer personally liable for any obligations incurred while it is an LLP. This does not mean that an LLP is a separate entity from the original GP or LP, though. Rather, the LLP serves as an umbrella to protect the existing general or limited partnership from certain liabilities.

There has also been recent developments in the way that LLPs are taxed which makes it a good business structure overall for avoiding liability. However it must be registered annually with the secretary of state for a fee of $200 per partner. An LLP is also required to carry debt liability insurance for unlawful acts, errors, negligence or omissions. An attorney will be able to tell you what other requirements are necessary to making sure your business is compliant with lesser-known regulations.

Not all partnerships that apply for LLP registration are approved by the secretary of state. It could be due to the lack of formation documents for either a general partnership or limited partnership. If the previous LLP registration had already expired, it cannot be renewed. However, a new application may be submitted. In most cases, the simplest way to understand and form an LLP is to engage the services of business formation attorney familiar with laws on LLPs.

4 Elements of a Successful Contract

Making a contract is essential in business. Contracts give both parties assurance; both parties in the contract have stability, understanding and respect that each has their own parts to play in the agreement. Although oral agreements are accepted, written contracts enables business and the other party involved legal documentation regarding the expectations of both parties along with proper handling of possible negative situations.

Having a clear and solid contract enables the business to carry on the development and improvement of their products or the services that they offer, which in turn benefits their customers. Contracts give both parties the chance to safeguard their resources, and it can be legally enforce in a court of law. A good contract must be clear, comprehensible, and legally protects a company, and not aimed to harm it.

It can be difficult to make contract negotiations, especially since people tend to just skim over the contract and just go straight to making sure the work is done. It is always helpful to understand how a good contract works.

  1. Make sure that there are contract preparation lawyers involved, and that both parties’ lawyers have approved on the conditions and agreements. Contacts are legally binding, therefore it would be greatly befitting if there is someone who offers and provides legal advice.
  2. The contract should be beneficial to both parties. Although both parties have their own interests in mind, an agreement should be made that ensures these interests are protected. Make sure both parties understand what is written on the contract; everyone would greatly appreciate the gesture.
  3. Make sure that the contract is project-specific. Not being specific can bring about confusion, therefore be clear about what needs to be done and ensure that the supporting language assists the mission of the project (generally).
  4. The contract should protect your rights. Make sure that the contract has you covered in case legal actions are taken against you or the business.

Making a contract may seem hard because of the many complexities and accounting procedures that seem to train along with it’ however, it is always advised to have contracts made in writing in all business transactions. Agreements that include significant investments or big-risk decisions should be put in a contract to make sure the possible losses are limited, along with the uncertainty. Additionally, if one party decides to back out, it can be held accountable. That is part of the reason contracts exist: to reduce the chances one of the involved parties from cheating the other.