Issues of Liability in Limited Liability Partnerships
Limited Liability Partnership is one form of entity formation under which businesses in Florida can choose to incorporate. There are many benefits to forming an LLP. However, there are some considerations as well. In essence, a limited liability partnership is a general partnership. The biggest advantage of forming a limited liability partnership as opposed to a traditional general partnership is that LLPs offer partners limited personal liability preventing one partner or both from personally responsible for certain actions occurring under the name of the partnership.
As discussed above, a limited liability partnership is similar to a general partnership; however, an LLP possess limited liability for certain actions taken under the name of the partnership. Each state varies as to the limitation it provides. Some states will protect debts of the partnership and stop at acts of negligence and recklessness. Other states will go as far as providing protection as to the level of a corporation. In Florida, limited liability partners cannot be held responsible for the actions of one of the partners. This includes debts and liability flowing from the negligence of one partner. If the partnership is sued as a whole, the personal assets of the partners are protected from suit unless actions taken by one or more partners require access to personal assets.
Other Advantages of a Limited Liability Partnership
Given that the partners are personally protected by the partnership, they are also equally responsible for the decisions made surrounding the business. That is because partnerships share equally in the profits and losses of the business enterprise unless this is augmented in the partnership contract. Given that an LLP is a general partnership at its core, issues of securities law will not come into play should the partnership “change hands.” This kind of formation is not subject to state or federal oversight as it relates to issues of stocks. Because of these advantages, businesses such as medical practices and law firms favor the use of LLPs for entity formation.
Forming a Florida LLP
To form an LLP in Florida, the state requires agreement by two people who intend to share in the profits and losses of the business. Therefore, even if an LLP was not specified, if two individuals form a business, Florida would automatically consider the business an LLP. The name of the business must include the letters “LLP.” The partnership must possess an EIN or an Employer Identification Number as required by the federal government. In addition, a resident agent is to be assigned to the business for receiving possess of service and other important business documents.
Your Florida Business Law Attorney
Sweeney Law, P.A. is a recognized business law firm with years of experience advising business owners on liability issues as it relates to entity formation. Fort Lauderdale business attorney Brendan Sweeney is here to guide you and ensure that your business and personal assets are well-protected. Contact us now for a consultation.