There are a number of alternatives to lớn choose from when forming a new business entity. Corporations, partnerships, limited liability companies, & cooperatives come in a variety of different permutations, including limited liability limited partnerships (LLLPs).
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What Is a Limited Liability Limited Partnership?
A limited partnership (LP) is a type of partnership that has one or more general partners, và one or more limited partners. The general partners manage the LP, while the limited partners are only involved financially & are excluded from management. A major disadvantage is that general partners are jointly and severally liable for the partnership’s obligations, although limited partners are protected from liability (unless the limited partner executes guaranties, etc.).
In the past, some business owners created an LLC or corporation to lớn serve sầu as the general partner to lớn eliminate risk for general partners. A limited liability limited partnership (LLLP) eliminates the need for this strategy.
An LLLP.. is a type of limited partnership, however, unlượt thích in an LPhường, LLLPhường general partners’ liability for LLLPhường debts or obligations is limited.
BENEFITSAn LLLP can vị anything that a regular LP.. can bởi.General partners have sầu limited liability, and partners are protected from liability if the partnership is sued.The need to use a limited liability entity for the general partner is eliminated.
DRAWBACKSSome states vì not have an LLLPhường statute, which means they won’t recognize the asset protection it provides.Some states vị not allow for the formation of an LLLP..LLLPs are relatively new, which means they haven’t been thoroughly tested or proven their reliability in a variety of situations, and they don’t have sầu a large toàn thân of case law interpreting and applying law khổng lồ them.
LLLPs are not tremendously common because they haven’t been around for as long as other commonly used entities (e.g., corporations), and some state’s laws vị not provide for an LLLP.. There can also be issues if an LLLP.. formed in one state operates in a state that does not recognize LLLPs.
If you want to lớn consider an LLLP.., consult with your attorney lớn ensure that you follow your state’s laws & that you select the appropriate alternative provisions available. Partnerships, LPs, và LLLPs are very flexible, và there are many considerations in setting them up & drafting the partnership agreement và other documents involved.
Some states have a statute that specifically addresses & authorizes forming an LLLPhường, while other states ask LPs khổng lồ tệp tin for limited liability protection, with the filing required to be renewed annually or the protection lapses. The following state laws include LLLPhường enabling statutes:AlabamaArizonaColoradoDelawareFloridaGeorgiaHawaiiIdahoIllinoisIowaKentuckyMarylandMinnesotaMissouriMontanaNevadaNorth CarolinaNorth DakotaOklahomaPennsylvaniaSouth DakotaTexasVirginiaWashingtonWyoming
In addition, California recognizes LLLPs formed in other states. As time goes by, we will likely see more states joining this menu và enabling the formation of LLLPs.
To determine whether an LLLP suits the structure & goals of your business, consult with Carnahan, Evans, Cantwell và Brown, Phường.C. Your attorney can help you compare all of the business entity options available to you, including the somewhat similar limited partnership (LP) và limited liability partnership (LLP). Then, they will help you phối up a business structure that works for you và your business goals. When you’re ready to lớn get started, give sầu us a hotline at 417-447-4400.