Exploring Limited Liability Partnerships and Companies

Limited Liability Partnership and limited liability company Limited Liability Partnership(LLP)

Many businesses are formed as partnerships. There are actually several different types of partnerships, including limited liability partnerships.

Partnerships are the most common business structure for businesses that have more than one owner. Many businesses, ranging from retail stores to accounting firms, are structured as partnerships. A business partnership is a for-profit business established and run by two or more individuals. There can be any number of partners involved in the business, as long as there are at least two. A business partner is a co-owner of the business.

Most business partnerships are general partnerships, meaning that

(Adapted from JRank's law library, which has more detailed information on the history of LLC's in the U.S. )

Advantage for limited liability companies :

Limited Liability – The obvious advantage of a Limited Liability Company is the financial security that comes with the business. The Company’s shareholders will only be liable for any debt the company accrues according to the levels of their own investment and no more. This can provide a comfortable feeling of security for investors in the Company.

Ownership and Control – In the case of Private Limited Companies, the Directors are also usually the main shareholders of the Company. Thus both the ownership and control of the business remain in their hands. Decisions can be made quickly and easily, with little fuss, allowing for a more successful business management platform.

Employee Shareholders – In some instances employees can purchase shares (or be granted shares via a company share scheme) and become shareholders of the company. This is good as it rewards the employee’s for their work, providing extra motivation beyond a mere salary. Not only will they have a vested interest in seeing the business succeed, but they will have a say in how it is

This can make it difficult for the company and especially investors to know who’s in charge, who can sign certain contracts, etc. Some of this confusion can be avoided by creating an LLC Operating Agreement.

Limited Life: In many jurisdictions, if a member departs the LLC, the LLC ceases to exist. This is unlike a corporation whose identity is unaffected by the comings and goings of shareholders. Members of LLCs can combat this weakness in the Operating