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Limited Liability Partnership

A limited liability partnership is a partnership which combines features of a partnership and a corporation. The partners in an LLP are not responsible or liable for other partner's mishaps or errors. Partners of an LLP are allowed to conduct day to day management of the company where as corporate shareholders are not entitled to such hands on involvement. Below are a few questions about limited liability partnerships that have been answered by Experts.

Can an LLP be formed and have 3 individual members with 33% stake and a General Partner (an LLC) have 1% stake? Does this afford any more individual protection than just forming an LLC with every member having 33.3% stake?

The general partner would be responsible for all of the partnership liabilities and the partners who have the 33% are liable for only the amount of their investment in the company. This is an asset protection strategy. However, this is only effective if the limited partners remain limited and avoid involvement in activities such as day to day management. It is important to maintain the chain of command if the limited partners are employed by the company. They need to follow company policies and rules and refrain from any management activities.

In order to retain the protection of an LLP, the formalities within the LLP should be upheld consistently. It is important for the general partner to maintain insurance and assets to provide adequate coverage of all aspects of the business. This is often one of the more neglected elements of running this type of business. Weak links in the LLP such as a lack of assets and insurance sometimes provokes creditors to seek money owed to them. That is why it's so important for an LLP to maintain a strong business core. A strong business reflects confidence to creditors, which keeps the creditors from worrying about the business's ability to pay their debt.

Are LLC's legal in PA and what is difference between LLP vs. LLC in Pa?

A limited liability partnership is very similar to a general partnership with the exception of liability. The partners in a LLP are not held personally liable for acts of negligence by individual partners or the employees who are not under their supervision. This type of protection is a better option for professionals.

A limited liability company allows members to actively manage the company. Members share in both profit and loss of the company and have rights to the distribution of company assets, making an LLC a mixture of a partnership and a corporation.

Both LLP and LLC is pass through entities which means that the members are responsible for the company taxes which are added to each individual personal tax return.

Clarification about application for forming a Limited Liability Partnership

Case details: I'm about to start an LLP. I'm doing the biz filing. One of the questions on the application asks: “Do you expect to have $1,000 or less in employment tax liability for the calendar year? (If you expect to pay $4,000 or less in wages, you can select yes.)

What does this question mean? My partner and I don't plan on having any employees for quite a while (if ever). So, would we be exempt from employment tax liability? Or, would money we take as personal earnings count towards wages?


What the question is asking is; do you expect to pay wages which will create a state employment tax liability? If you have paid yourself by drawing from the profits but not as a wage, the draws wouldn't be considered a state employment tax. However, you may need to file for federal self-employment tax. In the event that your situation changes, you can always update your LLP.

I want to set up a (LLP) Limited Liability Partnership in OK. My business is a mobile food business that I plan to expand. I want the members to be able to get a payout check off the net profit less the expenses and a portion of the profit that will be used to expand and operate the business. I need someone to set this up for Me.

You will need a limited liability company for this type of business. To set up this type of business, you can fill out the form on the link provided below and submit the form to the Oklahoma Secretary of State. You will also find an address for the OSS on the form. http://www.sos.ok.gov/forms/fm0074.pdf There will be a filing fee of $100.

As for distributing the company profits, this should be done by vote through the members of the LLC and listed in the company's minute book, that the net profit will be distributed with the exception of expenses and a portion of the net profit being applied to the business operations and expansion.

Once you have determined the amount to be distributed, you would pay each member based on their ownership of the business. For example, if the profit to be distributed among the partners was $1000 and one partner owned 25% of the company, his/her share would be $250, another partner owned 60%, and they would receive 600% and so on. To learn more about limited liability partnerships, you can consult an Expert in Business law.

Ask a Business Lawyer

Law Pro
Law Pro, Attorney
Category: General
Satisfied Customers: 1767
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
11688690
Type Your Business Law Question Here...
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7 Business Lawyers are Online Now

How JustAnswer Works:

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    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
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  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Business Lawyers are online & ready to help you now

Law Pro
Attorney
Satisfied Customers: 1767
20 years experience in business law - sole proprietor, partnership, and corporations
Dimitry K., Esq.
Attorney
Satisfied Customers: 1495
Run my own successful business/contract law practice.
MShore Law
Attorney
Satisfied Customers: 1233
Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

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