Limited Liability Partnerships Flashcards
What document, if any, creates an LLP?
An LLP is formed when general partners file a statement of qualifications w/ the appropriate public official.
Who is in charge of managing an LLP?
The manager, or general partner, of an LLP manages the business. Every LLP must have at least 1 general partner.
Are “big” & “small” decisions treated differently in an LLP?
It is up to the specific LLP to outline this in their agreements.
Who may own an LLP? Are there any restrictions?
Anyone above the age of 16. Families may own LLPs as well.
To what extent are owners liable for actions of an LLP?
LLPs avoid the risk posed by limited partnerships that place much of liability of other partners onto the general partner. This structure allows general partners to convert their entity & gain the protective shields enjoyed by limited partners or corporate shareholders.
Are some owners treated differently than others in an LLP?
In the absence of an LLP agreement, all members will be treated equally, w/ equal voting rights & profit entitlement.
Absent an election, who pays tax on earnings of the business?
LLPs are treated as pass-through entities. They are not subject to tax and instead distributed onto its partners’ personal taxes.
When a limited partner engages in wrongful conduct on behalf of the limited partnership & causes an injury resulting in damages, the limited partner is [BLANK] liable to pay damages to the injured party
personally
LLPs are formed when a general partnership files a [BLANK] w/the appropriate public official
a statement of qualification
The partnership agreement of the LLP often controls the amount & methods of capitalizing the business & the procedures for collecting additional contributions from partners as necessary (a process known as [BLANK] call)
capital call
What is typically included in a statement of qualification?
- An affirmative statement electing to become an LLP
- The name & street address of the business
- An effective date
