What Is An LLP?

Answer:
An LLP is a Limited Liability Partnership. This

is a partnership where some or all of the partners will have limited liability with the company. In this way, it has characteristics of both a partnership and a corporation.

In an LLP, one partner is not held liable for the misconduct of one of the other partners. This is a big difference from a regular partnership. In the LLP, some of the partners will be similar to corporation stockholders, in that the have a limited amount of liability. Some countries require that at least one of the partners be a general partner, which means that they have unlimited liability. Also, unlike a corporation, the partners all have the right and ability to manage the business directly, without having to voice concerns at a stockholder meeting. An LLP will also have different levels of tax requirements and liability than a corporation will.

A limited liability partnership is different from a limited partnership. A limited partnership will require one or more partners to have unlimited liability, but will allow others to become passive limited liability partners. A limited liability partnership will allow the partners to manage the business and still have limited personal liability. With these differences, a limited liability partnership is better for businesses where all investors want to actively help to manage the business.

Limited Liability Partnerships first began to be formed in the United States in the early 1990s. In 1992, only two states allowed for the formation of an LLP, but by the time LLPs were added to the 1996 Uniform Partnership Act, over forty states allowed for an LLP to be formed.

Limited liability partnerships were first formed as a result of the aftermath of the collapse of home and energy prices in Texas in the 1980s. This led directly to the savings and loan crisis. After being unable to recover much money from the banks, they went after the lawyers and accountants that advised them. The first LLP laws were passed in order to protect innocent members of law and accounting firms from liability. A few states only protects the person from negligence liability.