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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.

7 Responses to “Forming an LLP”

  1. This is a very important write up, as many people do not understand how to form an LLP in Texas. Great read.

  2. I really love this style of blog, thanks for writing.

  3. Your blog is improperly displaying characters when I use Ubunto with Google Chrome. Just thought you should know!

  4. lcnet tx says:

    Law is always so puzzling to me, thanks for making sense of it.

  5. I sent this around, good post

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