LLP is also a form of partnership, where the partners’ liability is limited as well as no partner will be held liable for the acts of other partners. On the other hand, the general partnership brings unlimited liabilities to the respective partners, and hence they are jointly or severely liable for the debt.
Why choose a general partnership?
Ease of creation: No state filing is required. The partnership is formed when the partners begin business activities.
Low cost of operation: Because general partnerships are not formed through state filing, they are not required to pay form filling fees, ongoing state fees, or franchise taxes. The partnership will still have to obtain business licenses and permits required for operation, however.
Some constant requirements: Unlike corporations, general partnerships are not required to issue partnership interest, hold annual meetings of owners and separate individual assets from business assets. Following a partnership agreement, it outlines how the partnership will be managed; the roles of each partner and what events caused the partnership to end operations are recommended.
Why choose a limited liability partnership?
Professional service business: limited liability partnership can only be created by certain types of professional service businesses, such as lawyers, accountants, architects, dentists, doctors, and other fields are treated as professionals under the law of each state.
Protection of personal property: Personal property of partners in LLP cannot usually be used to satisfy business loans and liabilities. Limited Liability Partnership does not shield partners from liability for their personal acts. Simply put, LLP cannot limit the liability of owners for their own misconduct.
For any legal advice, or limited liability partnership registration contact Chartered Munshi.