Limited Liability Partnerships (LLPs)

Question 1

Limited Liability Partnerships (LLPs)

Taxation

Answer 1

LLPs are treated as general partnerships for tax purposes

Income and losses are allocated and passed through to partners

The entity does not pay taxes, but still must file information returns

Question 2

Limited Liability Partnerships (LLPs)

Governing Law

Answer 2

Same as general partnerships

Governing law is specified in the partnership agreement and is generally the laws of the state of filing

Question 3

Limited Liability Partnerships (LLPs)

Formation

Answer 3

LLPs require formal filing with the state

Some states limit LLPs to certain professions

Other Formation Requirements:
1. Naming Requirements (must state LLP)
2. Foreign LLP Registration
3. State Requirements for Continuity

Question 4

Limited Liability Partnerships (LLPs)

Partnership Liability

Answer 4

The partnership is liable for:
1. Actionable conduct of a partner
2. Acting:
a. In the ordinary course of business
OR
b. with the authority of the partnership

A partnership may sue and be sued in the name of the partnership

Question 5

Limited Liability Partnerships (LLPs)

Partner Liability

Answer 5

In general, all partners are liable jointly and severally for all the obligations of the partnership

Any or all of the partners may be sued.

Operating as an LLP does not allow a partner to escape liability for their own conduct.

Liability for a Partner’s Conduct Modifications:
1. New Partner Liability
2. Partial Shield Jurisdictions
3. Full Shield Jurisdictions

Question 6

Limited Liability Partnerships (LLPs)

Partner Liability:
New Partner Liability

Answer 6

Persons admitted as partners into existing partnerships are not personally liable for any partnership obligations incurred before they were admitted to the partnership.

Question 7

Limited Liability Partnerships (LLPs)

Partner Liability:
Partial Shield Jurisdictions

Answer 7

Partners Not Liable For:
1. Other Partners’ malfeasance, (unless directly supervising/controlling)

Partners Liable For (if judgment is against them):
1. Their own malfeasance
2. Obligations of the partnership
3. Other partners’ malfeasance if directly supervising/controlling

Liable for contracts, but not torts

Question 8

Limited Liability Partnerships (LLPs)

Partner Liability:
Full Shield Jurisdictions

Answer 8

Partners Not Liable For:
1. Other Partners’ malfeasance, (unless directly supervising/controlling)
2. Obligations of the Partnership

Partners Liable For (if judgment is against them):
1. Their own malfeasance
2. Other partners’ malfeasance if directly supervising/controlling

No Tort liable for contracts or torts, just own wrongful acts

Question 9

Limited Liability Partnerships (LLPs)

Obligations of the Partnership

Answer 9

1. Money Borrowed
2. Contractual Commitments
3. Rent
4. Insurance
5. Etc.