A Limited Liability Partnership fuses the best of an LLC with the best of a partnership. Essentially, no one has to be a general partner. All of the owners are considered limited liability partners. In most states, an LLP maintains limited risks when it comes to business transactions through the liability clauses. In other words, you are only liable so far as the business has the assets, no matter how much the business actually owes creditors or in the lawsuit. In some states, an LLP even limits the amount of authority that the partners have to bind one another in contractual business agreements. Most of the time, you'll have to prove that you would not have agreed to the deal if you had known about it, and that you had made it clear you did not want to enter into the agreement in the first place. Absent fraud or other similar illegal activities, you can't avoid that kind of responsibility in a General Partnership except in a minority of cases.
A Limited Liability Partnership can only be created through an express Partnership Agreement that complies with individual state laws. Additionally, most states have stricter compliance requirements for partnerships to retain their LLP status. If they don't keep up with these requirements, then they can lose their status as LPs and revert back to General Partnerships.
We can help you make a Partnership Agreement so you can make your partnership legal.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
