Limited Liability Partnership
Best for: Professionals and businesses seeking to limit liability while retaining a flexible partnership structure.
Key Features:
- Ownership: Owned by two or more partners.
- Liability: Partners have limited liability, meaning they are not personally responsible for the debts or liabilities of the business (except in cases of fraud or negligence).
- Control: Partners share control, but the level of authority can be defined in the LLP agreement.
- Taxation: LLPs are typically taxed like partnerships.
Advantages:
- Limited liability protects personal assets from business liabilities.
- More flexibility in management compared to a corporation.
- Easier to raise capital than a sole proprietorship or partnership, due to limited liability.
Disadvantages:
- More expensive and complex to set up than a sole proprietorship or general partnership.
- More regulatory requirements and formalities
When to Choose a Limited Liability Partnership?
If you want the flexibility of a partnership but also want to protect yourself from personal liability.
If you’re in a profession that allows LLPs (e.g., law firms, accounting firms).
If you want to combine the benefits of partnership-style management with limited liability.