A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of
partnership
A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments o ...
s and
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
s. In an LLP, each partner is not responsible or liable for another partner's misconduct or negligence. This distinguishes an LLP from a traditional partnership under the
UK Partnership Act 1890
The Partnership Act 1890 (c. 39) is an Act of the Parliament of the United Kingdom which governs the rights and duties of people or corporate entities conducting business in partnership. A partnership is defined in the act as 'the relation which ...
, in which each partner has
joint (but not several) liability. In an LLP, some or all partners have a form of
limited liability
Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...
similar to that of the shareholders of a corporation. Unlike corporate shareholders, the partners have the power to manage the business directly.
In contrast, corporate shareholders must elect a board of directors under the laws of various state charters.
The board organizes itself (also under the laws of the various state charters) and hires corporate officers who then have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. An LLP also contains a different level of tax liability from that of a corporation.
Effect of limited liability
Limited Liability Partnerships, as well as all forms of limited liability companies, offer alternatives to traditional company and corporate structures. Limited liability can enable opportunities for new business growth that were formerly accessible only to those who had access to large amounts of capital or other resources.
Depending on jurisdiction and industry, there can be negative consequences for stakeholders associated with limited liability. For some large accountancy firms in the UK, reorganizing as LLPs and LLCs has relieved them of owing the "duty of care" to individuals and clients who are adversely affected by audit failures.
Accountancy firm partners share the profits, but don’t have to suffer the consequences of negligence by firm or fellow partners. Not content with lobbying and financing political parties to get their way, accountancy firms have hired entire governments to advance their interests. PricewaterhouseCoopers and Ernst &Young hired the legislature of Jersey to enact an LLP Bill, which they themselves had drafted. They awarded themselves protection from lawsuits, with little public accountability... Accounting is central to all calculations about institutionalised abuses, tax and responsibility avoidance.
In the U.S., the Delaware Supreme Court Chief Justice Myron Steele suggested that limited liability entities should not be held to common law standards of
fiduciary
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for exampl ...
principles (as applied to all other company and corporate structures). Instead, he argued that courts should use contractual analysis of the partnership agreement when assessing cases of improper
corporate governance
Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions th ...
. This directly led to elimination of the "independent fiduciary duty of good faith" in Delaware corporate law in 2006.
Worldwide
Limited liability partnerships are distinct from
limited partnerships
A limited partnership (LP) is a form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited p ...
in some countries, which may allow all LLP partners to have limited liability, while a limited partnership may require at least one unlimited partner and allow others to assume the role of a passive and limited liability investor. As a result, in these countries, the LLP is more suited for businesses in which all investors wish to take an active role in management.
In some countries, an LLP must have at least one person known as a "general partner", who has unlimited liability for the company.
There is considerable difference between LLPs as constituted in the U.S. and those introduced in the UK under the
Limited Liability Partnerships Act 2000
The Limited Liability Partnerships Act 2000 (c.12) is an Act of the Parliament of the United Kingdom which introduced the concept of the limited liability partnership into English and Scots law. It created an LLP as a body with legal personality ...
and adopted elsewhere. The UK LLP is, despite its name, specifically legislated as a corporate body rather than as a partnership.
Australia
Partnerships are governed on a state-by-state basis in Australia. In Queensland, a limited liability partnership is composed of at least one general partner and one limited partner. It is thus similar to what is called a limited partnership in many countries.
Canada
All provinces and territories—except
Yukon
Yukon (; ; formerly called Yukon Territory and also referred to as the Yukon) is the smallest and westernmost of Canada's three territories. It also is the second-least populated province or territory in Canada, with a population of 43,964 as ...
,
Prince Edward Island
Prince Edward Island (PEI; ) is one of the thirteen Provinces and territories of Canada, provinces and territories of Canada. It is the smallest province in terms of land area and population, but the most densely populated. The island has seve ...
, and
Nunavut
Nunavut ( , ; iu, ᓄᓇᕗᑦ , ; ) is the largest and northernmost Provinces and territories of Canada#Territories, territory of Canada. It was separated officially from the Northwest Territories on April 1, 1999, via the ''Nunavut Act'' ...
—permit LLPs for lawyers and accountants. In
British Columbia
British Columbia (commonly abbreviated as BC) is the westernmost province of Canada, situated between the Pacific Ocean and the Rocky Mountains. It has a diverse geography, with rugged landscapes that include rocky coastlines, sandy beaches, ...
, the Partnership Amendment Act, 2004 (Bill 35) permits LLPs for lawyers, accountants, and other professionals, as well as businesses.
China
In China, the LLP is known as a
special general partnership (特殊普通合伙). The organizational form is restricted to knowledge-based professions and technical service industries. The structure shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners.
France
There is no exact equivalent of a Limited Liability Partnership in France. A limited partnership is equivalent to the French law vehicle known as a
fr:Société en Commandite. A partnership company can be an equity partnership, known as a
fr:Société en Participation (SEP), of a general partnership known as a
:fr:Société en Nom Collectif (SNC).
Germany
The German ''Partnerschaftsgesellschaft'' or PartG is an association of non-commercial professionals, working together. Though not a corporate entity, it can sue and be sued, own property and act under the partnership's name. The partners, however, are jointly and severally liable for all the partnership's debts, except when only some partners' misconduct caused damages to another party — and then only if
professional liability insurance
Professional liability insurance (PLI), also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance which helps protect professional advice-, consulting, and ser ...
is mandatory. Another exception, possible since 2012, is a Partnerschaftsgesellschaft mbB (mit beschränkter Berufshaftung) where all liabilities from professional misconduct are limited by the partnership's capital.
The ''Partnerschaftsgesellschaft'' is not subject to corporate or business tax, only its partners' respective income is taxed.
Greece
An LLP is an approximate equivalent to the Greek ΕΠΕ (Εταιρεία Περιορισμένης Ευθύνης ''Etería Periorizménis Evthínis'') meaning Company of Limited Liability. In an ΕΠΕ the partners own personal shares that can be sold by a partner only when all other partners agree. The business management can be exercised either directly by the board of partners or by a General Manager. In the aspect of liability, an ΕΠΕ is identical to an LLP.
India
The
Limited Liability Partnership Act 2008 was published in the official ''Gazette of India'' on 9 January 2009 and has been in effect since 31 March 2009. However, only limited sections of the Act have been ratified. Rules of the Act were published in the official Gazette on 1 April 2009 and amended in 2017. The first Limited liability partnership (LLP) was incorporated on 2 April 2009.
In India as in many other jurisdictions, an Limited liability partnership (LLP) is different from a Limited Partnership. A limited liability partnership (LLP) operates like a limited partnership, but in an Limited liability partnership (LLP), each member is protected from personal liability, except to the extent of their capital contribution in the LLP.
# In India, for all purposes of taxation (service tax or any other stipulated tax payment), an LLP is treated like any other Partnership firm.
# Liability is limited to each partners agreed upon contribution to the Limited liability partnership (LLP).
# No partner is liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner's wrongful business decisions or misconduct.
# An Limited liability partnership (LLP) shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike an ordinary partnership firm where the maximum number of partners can not exceed 20.
# The Limited liability partnership (LLP) Act has a mandatory requirement that one of the partners in the LLP must be an Indian.
# Provisions have been made for corporate actions like mergers and acquisitions.
# While enabling provisions in respect of winding up and dissolution of LLPs have been made, detailed provisions in this regard would be provided by way of rules under the Act.
# The Registrar of Companies (RoC) shall register and control LLPs.
# The Act also provides rules for Limited Partnerships.
Characteristics
# Separate legal entity: Like a company, LLP also has a separate legal entity. So the partners and the Limited liability partnership (LLP) in are distinct from each other. This is like a company where directors are different from the company.
# No requirement of minimum capital: In the case of companies there should be a minimum amount of capital that should be brought by the members or owners who want to form it. But to start an Limited liability partnership (LLP) there is no requirement of minimum capital.
# Minimum number of members: To start a limited liability partnership at least two members are required initially. However, there is no limit on the maximum number of partners.
# No requirement of compulsory audit: All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of Limited liability partnership (LLP), there is no such mandatory requirement. A limited liability partnership is required to get the audit done only if:
::* the contributions of the LLP exceeds ₹ 25 lakhs or
::* the annual turnover of the LLP exceeds ₹ 40 lakhs
Benefits
# It is more flexible to organize the internal structure of LLP. Comparatively, it is complex to organize the internal structure of a company.
# There is no maximum limit for the number of partners in LLP. In the private limited company, shareholders are limited to the extent of 200 shareholders.
# Raising and utilization of funds depends on the partners will. Funds can be bought and utilized only as per the norms listed under the Companies Act, 2013.
# Limited liability partnership (LLP) is exempt from Dividend Distribution Tax (DDT). In contrast, a company has to pay DDT on dividend distribution.
# Professionals like
Chartered accountant,
Cost Accountant
Cost accounting is defined as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, classifying, al ...
(CMA),
Advocate
An advocate is a professional in the field of law. Different countries' legal systems use the term with somewhat differing meanings. The broad equivalent in many English law–based jurisdictions could be a barrister or a solicitor. However, ...
s, engineers, and doctors may prefer to register as LLPs.
# No requirement of compulsory audit: All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of Limited liability partnership (LLP), there is no such mandatory requirement.
Disadvantages
# Any act of the partner without the other partner may bind the Limited liability partnership (LLP).
# Limited liability partnership (LLP) cannot raise money from the public.
# Angel investors and venture capital firms generally prefer not to invest in LLPs. Private Limited companies are preferred over LLPs.
Incorporation process
* Obtain digital signature from the partners.
* Apply for the Director Identification Number which is necessary to become a partner in the Limited liability partnership (LLP).
* Apply for the name approval for the LLP (Limited liability partnership) Registration.
*
India Registrar of Companies issues the Certificate of Incorporation which is the proof for the registration.
* File for a
Permanent Account Number (PAN) from NSDL.
* Execute an LLP agreement and file with the registrar within thirty days of the formation of the LLP.
* Company details can be checked on the Ministry of Corporate Affairs, Companies Master Data Website.
Ireland
Limited liability partnerships are permitted in Ireland under the Legal Services Regulation Act, 2015.
Japan
were introduced to
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
in 2006 during a large-scale revamp of the country's laws governing business organizations. Japanese LLPs may be formed for any purpose (although the purpose must be clearly stated in the partnership agreement and cannot be general), have full limited liability and are treated as pass-through entities for tax purposes. However, each partner in an Limited liability partnership (LLP) must take an active role in the business, so the model is more suitable for
joint ventures
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access ...
and small businesses than for companies in which investors plan to take passive roles.
Japanese LLPs may ''not'' be used by lawyers or accountants, as these professions are required to do business through an unlimited liability entity.
A Japanese Limited liability partnership (LLP) is not a corporation, (i.e. a separate legal entity from partners within the meaning of Anglo-American Law) but rather, exists as a contractual relationship between the partners, similar to an American Limited liability partnership (LLP). Japan also has a type of corporation with a partnership-styled internal structure, called a
godo kaisha
Godo may refer to several places:
*Several places in Boulkiemdé Province, Burkina Faso:
** Godo, Nanoro
** Godo, Pella
* Gōdo, Gifu
is a town located in Gifu, Japan. , the town had an estimated population of 19,361 and a population den ...
, which is closer in form to a British Limited liability partnership (LLP) or American
limited liability company
A limited liability company (LLC for short) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...
.
Kazakhstan
The concept of LLP exists in Kazakhstan law. All partners in a Kazakhstan LLP have limited liability, and they are liable for the debts of the partnership to the extent of the value of their corresponding participatory interests in the partnership. The names for LLP in Kazakhstan are "ЖШС" (which stands for Жауапкершілігі шектеулі серіктестік ''Zhawapkershiligi shektewli seriktestik'') in Kazakh and "ТОО" (which stands for Товарищество с ограниченной ответственностью ''Tovarishchestvo s ogranichennoy otvyetstvyennostʼyu'') in Russian. This is the most popular business form in Kazakhstan. Almost any private business may be incorporated as an LLP (notable exceptions are banks, airlines, insurance companies, and mortgage companies, which must be incorporated in the form of a joint stock company).
An LLP in Kazakhstan is a corporate body, and in fact, is a Limited Liability Corporation (LLC). Partners cannot conduct business on their own, and it is the corporate body that conducts the business.
There is also a concept of "simple partnership" in Kazakhstan law, which corresponds more closely to the general concept of partnership, but it is not widely used and is not well developed in Kazakhstan.
Kenya
In Kenya, limited liability partnerships have a legal personality distinct from its member partners. The liability of the partners is limited to any amount that may remain unpaid over the capital of the partnership. However, partners may be deemed liable for omissions or actions done by themselves if they lacked the relevant authority from the partnership or the affected party knew that such partner lacked authority or had no reason to believe that such person was a partner in the partnership. Registration is what vests such legal personality upon the entity. Registration is done by the registrar of companies after meeting. The requirements are set out in the Limited Liability Partnership Act of 2011.
Nigeria
In Nigeria, limited liability partnerships (LLP) have legal personality. However, one must register a partnership first before it can gain the status of limited liability partnerships. Either way the liability of the partners are limited.
Poland
A close equivalent to limited liability partnerships under
Polish
Polish may refer to:
* Anything from or related to Poland, a country in Europe
* Polish language
* Poles
Poles,, ; singular masculine: ''Polak'', singular feminine: ''Polka'' or Polish people, are a West Slavic nation and ethnic group, w ...
law is the ''spółka partnerska'', where all partners are jointly and severally liable for the partnership's debts apart from those arising from another partner's misconduct or negligence. This partnership type is only addressed to representatives of some "high risk" occupations, such as lawyers, medicine doctors, tax advisers, accountants, brokers, sworn translators etc.
Romania
An Limited liability partnership (LLP) is equivalent to the Romanian law vehicle known as a Societate civilă profesională cu răspundere limitată.
Singapore
LLPs are formed under the Limited Liability Partnerships Act 2005. This legislation draws on both the US and UK models of LLP, and like the latter establishes the Limited liability partnership (LLP) as a body corporate. However, for tax purposes it is treated like a general partnership, so that the partners rather than the partnership are subject to tax (tax transparency).
United Kingdom
In the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
LLPs are governed by the
Limited Liability Partnerships Act 2000
The Limited Liability Partnerships Act 2000 (c.12) is an Act of the Parliament of the United Kingdom which introduced the concept of the limited liability partnership into English and Scots law. It created an LLP as a body with legal personality ...
(in
Great Britain
Great Britain is an island in the North Atlantic Ocean off the northwest coast of continental Europe. With an area of , it is the largest of the British Isles, the largest European island and the ninth-largest island in the world. It is ...
) and the
Limited Liability Partnerships Act (Northern Ireland) 2002
The Limited Liability Partnerships Act (Northern Ireland) 2002 is an Act of the Northern Ireland Assembly which introduced the concept of the limited liability partnership into Northern Irish law, passed two years after the Limited Liability Part ...
in
Northern Ireland
Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...
, with the rules governing this scheme consolidated across the UK with the
Companies Act 2006
The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law.
The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...
, the latter coming into effect in 2009. It was lobbied for by the
Big Four auditing firms, all of which had converted by January 2003, limiting their liability for their audits.
A UK limited liability partnership is a corporate body - that is to say, it has a continuing legal existence independent of its members, as compared to a
partnership
A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments o ...
which may (in England and Wales, does not) have a legal existence dependent upon its membership.
A UK LLP's members have a collective ("joint") responsibility, to the extent that they may agree in an "LLP agreement", but no individual ("several") responsibility for each other's actions. As with a
limited company
In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by Share (finance), shares or by guarantee. In a company limited by ...
or a
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
, members in an LLP cannot, in the absence of fraud or wrongful trading, lose more than they invest.
In relation to tax, however, a UK LLP is similar to a partnership, namely, it is tax-transparent. That is to say it pays no UK
corporation tax
A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed a ...
or
capital gains tax
A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, Bond (finance), bonds, precious metals, real estate, and property.
Not all count ...
. Instead, LLP income and/or gains are distributed gross to partners as self-employed persons, rather than as PAYE employees. Partners receiving income and/or gains from an LLP are liable for their own taxation.
There is no requirement for the LLP agreement even to be in writing because simple partnership-based regulations apply by way of default provisions. It has been closely replicated by Japan, Dubai, and Qatar. It is perhaps closest in nature to a
limited liability company
A limited liability company (LLC for short) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...
in the United States of America although it may be distinguished from that entity by the fact that the LLC, while having a legal existence independent of its members, is not technically a corporate body because its legal existence is time limited and therefore not "continuing."
The LLP structure is commonly used by
accountant
An accountant is a practitioner of accounting or accountancy.
Accountants who have demonstrated competency through their professional associations' certification exams are certified to use titles such as Chartered Accountant, Chartered Certifi ...
s to retain the tax structure of traditional partnerships whilst adding some limited liability protection. LLPs are also becoming more common among firms in the legal profession such as
solicitor
A solicitor is a legal practitioner who traditionally deals with most of the legal matters in some jurisdictions. A person must have legally-defined qualifications, which vary from one jurisdiction to another, to be described as a solicitor and ...
s although they are permitted to use a limited company structure.
United States
![217 West Main Street GA](https://upload.wikimedia.org/wikipedia/commons/a/a3/217_West_Main_Street_GA.jpg)
In the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
, each individual
state
State may refer to:
Arts, entertainment, and media Literature
* ''State Magazine'', a monthly magazine published by the U.S. Department of State
* ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, United States
* ''Our S ...
has its own law governing their formation. Limited liability partnerships emerged in the early 1990s: while only two states allowed LLPs in 1992, over forty had adopted LLP statutes by the time LLPs were added to the
Uniform Partnership Act The Uniform Partnership Act (UPA), which includes revisions that are sometimes called the Revised Uniform Partnership Act (RUPA), is a uniform act (similar to a model statute), proposed by the National Conference of Commissioners on Uniform State La ...
in 1996.
The limited liability partnership was formed in the aftermath of the collapse of real estate and energy prices in Texas in the 1980s. This collapse led to a large wave of bank and savings and loan failures. Because the amounts recoverable from the banks were small, efforts were made to recover assets from the lawyers and accountants that had advised the banks in the early 1980s. The reason was that partners in law and accounting firms were subject to the possibility of huge claims which would bankrupt them personally, and the first LLP laws were passed to shield innocent members of these partnerships from liability.
Although found in many business fields, the LLP is an especially popular form of organization among professionals, particularly
lawyers
A lawyer is a person who practices law. The role of a lawyer varies greatly across different legal jurisdictions. A lawyer can be classified as an advocate, attorney, barrister, canon lawyer, civil law notary, counsel, counselor, solicitor, ...
,
accountants
An accountant is a practitioner of accounting or accountancy.
Accountants who have demonstrated competency through their professional associations' certification exams are certified to use titles such as Chartered Accountant, Chartered Certifi ...
, and
architects
An architect is a person who plans, designs and oversees the construction of buildings. To practice architecture means to provide services in connection with the design of buildings and the space within the site surrounding the buildings that h ...
. In some U.S. states, namely
California
California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...
,
New York,
Oregon
Oregon () is a U.S. state, state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington (state), Washington, while the Snake River delineates much of it ...
, and
Nevada
Nevada ( ; ) is a U.S. state, state in the Western United States, Western region of the United States. It is bordered by Oregon to the northwest, Idaho to the northeast, California to the west, Arizona to the southeast, and Utah to the east. N ...
, LLPs can only be formed for such professional uses. Formation of an LLP typically requires filing certificates with the county and state offices. Although specific rules vary from state to state, all states have passed variations of the
Revised Uniform Partnership Act The Uniform Partnership Act (UPA), which includes revisions that are sometimes called the Revised Uniform Partnership Act (RUPA), is a uniform act (similar to a model statute), proposed by the National Conference of Commissioners on Uniform State L ...
.
The liability of the partners varies from state to state. Section 306(c) of the Revised Uniform Partnership Act (1997) (RUPA), a standard statute adopted by a majority of the states, grants LLPs a form of limited liability similar to that of a corporation:
An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for such an obligation solely by reason of being or so acting as a partner.
However, a sizable minority of states only extend such protection against negligence claims, meaning that partners in an LLP can be personally liable for contract and intentional tort claims brought against the LLP. While Tennessee and West Virginia have otherwise adopted RUPA, their respective adoptions of Section 306 depart from the uniform language, and only a partial liability shield is provided.
As in a partnership or Limited liability company (LLC), the profits of and Limited liability partnership (LLP) are allocated among the partners for tax purposes, avoiding the problem of "
double taxation
Double taxation is the levying of tax by two or more jurisdictions on the same income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes).
Double liability may be mitigated i ...
" often found in corporations.
Some US states have combined the LP and LLP forms to create
limited liability limited partnership
The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership. The LLLP form of business entity is recognized under United States commercial law. An LLLP is a limited partnership, and it consists of ...
s.
See also
*
Professional corporation
Professional corporations or professional service corporation (abbreviated as PC or PSC) are those corporate entities for which many corporation statutes make special provision, regulating the use of the corporate form by licensed professionals su ...
*
Société à Responsibilité Limitée (SARL) for Francophone countries
References
Further reading
*
Immunity Shopping - Robert Flannigan, ''
Queen's Law Journal
The ''Queen's Law Journal'' is a Canadian peer-reviewed law review. The ''Journal'' is published by Queen's University at Kingston in Kingston, Ontario, Canada
Canada is a country in North America. Its ten provinces and three territor ...
'', Vol. 37, p. 39, 2011. Foreign liability rules potentially subject local competitors to uneven competition and the local population to increased levels of risk.
{{DEFAULTSORT:Limited Liability Partnership
Types of business entity
Legal entities
Partnerships