Limited Liability Partnership



Limited Liability Partnership

Introduction

Limited Liability Partnership is a legal form of partnership that must be classified as a capital company and also shows similarities with a partnership. LLP was introduced at the end of the eighties of the last century in the United States. In the United Kingdom, the legal form of limited liability partnership was introduced in 2000.

Discussion

In a limited liability partnership, one person or partner is not responsible for the liabilities of the other partner. This can be true for the case of misconduct or the negligence on the part of one of the partners. This is one of the major differences that the limited liability partnership has from the unlimited partnerships that are registered under the Partnership Act that was passed in the year 1890. In an unlimited partnership all the partners had several, as well as, joint liabilities. In the limited liability partnership, there are some partners who have a limited liability that is quite similar to the one that the shareholders of a corporation have. There also is another term for the limited liability partnership, and that is the presence of a general partner that has an unlimited liability. The partners in the limited liability partnership have the right to manage the business directly unlike the corporate shareholders. The shareholders of a corporation, under the law, also need to elect the board of directors. The level of tax liability in the limited liability partnership is also different than in corporations.

In some countries, the limited liability partnerships are different from the limited partnerships. This allows the partners of the limited liability partnership to enjoy some limited form of liability. On the other hand, in the limited partnerships, one of the partners needs to take up the role of a limited liability investor, as well as, a passive. The limited liability partnership in such countries is more suited to the businesses in which all the partners are willing to take up an active role and participation in the management of the business.

The limited liability partnership is governed by the limited liability partnership act of the year 2000. The limited liability partnership is a corporate body and has a legal existence that continues independent of the members of the limited liability partnership. The members of the limited liability partnership have a collective and joint responsibility as much as they agree to in the agreement of the limited liability partnership that they sign. The partners, however, do not have any responsibility of the actions of the other partner. The partners in the limited liability partnership do not have the risk of losing more than they have invested in the business in the cases in which they do not have made any wrongful trading or fraud.

In relation to the taxes, the limited liability partnership is similar to the limited partnership in the UK. The system for such partnerships is a tax transparent system. The limited liability partnership does not pay any capital gains tax ...