What Are the Differences between LLP Company and Partnership?
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The structure of your business will impact its legal protections. There are many options for businesses looking to incorporate, including the LLP and LLC. Each has advantages and disadvantages, but the choice will ultimately depend on the needs of your company. In this article, we'll take a look at what are the differences between LLP company and partnership to help you decide which one is right for your business.
The main difference between an LLPand a partnership is that an LLP offers limited liability to its owners, while a partnership does not. Generally speaking, this means that you will not be held responsible for the debts of the company unless you have intentionally participated in the wrongdoing. This can be beneficial if you are running a business that involves risky activities, such as medicine or law.
Another key difference between an LLP and a partnership has to do with taxation. LLPs are considered pass-through entities for tax purposes, meaning that the profits and losses of the company will be passed through to the partners' individual tax returns. This can be beneficial if you have multiple owners who are in different locations.
There are some restrictions on who can form an LLP, depending on state laws. For example, some states only allow licensed professionals, such as lawyers and architects, to form a LLP. Additionally, it is a good idea for an LLP to have a formal Partnership Agreement in place. Also, if an LLP's members want to add or retire a partner, the operating agreement should provide for this process MCA Portal.This will help ensure that the percentage of ownership and roles and responsibilities are documented.
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