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Houston, TX 77027

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2801 Regal Rd.

Suite 103

Plano, TX 75075

 

 

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© 2014 by FinishLine Tax Solutions. All rights reserved.

LLP Formations in Dallas, TX and all other areas in the US

 

Our professional staff at FinishLine Tax Solutions is well versed in the intricate laws which govern the formation of Limited Liability Partnerships. Although similar by design, there are distinct and important differences between LLC's and LLP's.  Our staff of tax professionals will enlighten you on the pros and cons of each so that you may be afforded the  opportunity to make an educated decision regarding which route is best for your organizational structure.

 

The Limited Liability Partnership (LLP) is essentially a general partnership in form, with one important difference. Unlike a general partnership, in which individual partners are liable for the partnership's debts and obligations, an LLP provides each of its individual partners protection against personal liability for certain partnership liabilities.

 

In 1991 Texas enacted the first LLP statute, largely in response to the liability that had been imposed on partners in partnerships sued by government agencies in relation to massive savings and loan failures in the 1980s. The Texas statute protected partners from personal liability for claims related to a copartner's Negligence, error, omission, Incompetency, or malfeasance. It also permanently limited the personal liability of a partner for the errors, omissions, incompetence, or negligence of the partnership's employees or other agents. By the mid-1990s, at least twenty-one states and the District of Columbia had adopted LLP statutes.

 

The limit of an individual partner's liability depends on the scope of the state's LLP legislation. Many states provide protection only against tort claims and do not extend protection to a partner's own negligence or incompetence or to the partner's involvement in supervising wrongful conduct. Other states provide broad protection, including protection against contractual claims brought by the partnership's creditors. For example, Minnesota enacted an expansive LLP statute in 1994. This piece of legislation provided that a partner in an LLP was not liable to a creditor or for any obligation of the partnership. It further provided, however, that a partner was personally liable to the partnership and copartners for any breach of duty, and also allowed a creditor or other claimant to pierce the limited liability shield of a partner in the same way a claimant may pierce the corporate veil of a corporation and personally sue an individual member of the corporation.

 

In states that recognize LLPs, a partnership qualifies as an LLP by registering with the appropriate state authority and fulfilling various requirements. Some states require proof that the partnership has obtained adequate liability insurance or has adequate assets to satisfy potential claims. All states require a filing fee for registration and also require that an LLP include the words Registered Limited Liability Partnership or the abbreviation LLP in its name.

 

A partnership that renders specific professional services may form an LLP and register as a professional limited liability partnership (PLLP). A PLLP is generally the same as an LLP except that it is an association solely of professionals. Each state specifies the qualifying professions for a PLLP. This business form is typically available to attorneys, physicians, architects, dentists, engineers, and accountants. New York's LLP statute restricts eligibility solely to partnerships that render professional services.

 

Advantages of LLP:

 

  • Renowned and accepted form of business worldwide in comparison to Company. 

  • Low cost of Formation. 

  • Easy to establish. 

  • Easy to manage & run. 

  • No requirement of any minimum capital contribution. 

  • No restrictions as to maximum number of partners.

  • LLP & its partners are distinct from each other.

  • Partners are not liable for Act of partners. 

  • Less Compliance level. 

  • No exposure to personal assets of the partners except in case of fraud. 

  • Less requirement as to maintenance of statutory records. 

  • Less Government Intervention. 

  • Easy to dissolve or wind-up. 

  • Professionals can form Multi-disciplinary Professional LLP, which was not allowed earlier.

  • No requirement as to Minimum Alternate Tax.