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Understanding the Types of LLCs-There are More Than You May Think


When people form businesses, they often debate on whether it would be better for them to start a traditional corporation or an LLC. But many people overlook the fact that there are different kinds of LLCs, and one of them may be right for you and your business.

One thing to remember about LLCs, is that there are different kinds of LLCs.

Single and Multi Member LLCs

A single member LLC is very much like a sole proprietorship. The sole owner is responsible for the company’s debts and taxes, but the LLC can still be taxed as a company, if it is registered with the state.

A multi member LLC is sometimes called a general partnership, but when the multi member LLC files articles or organization or incorporation, it is considered an LLC. The multiple owners can run the business themselves, or they can hire (non-owner) managers to run the organization (where it will be called a member-managed LLC).

Not all managers or owners need to actually do work for the LLC. Some managers may contribute time and effort to the LLC, and others may do little work, but may contribute capital or funding.

Like a traditional corporation, the multi member LLC has the traditional separation between members, individually, and the company—the company’s debts or liabilities are not those of the individual owners or managers.


LLCs with multiple owners can look like partnerships. In fact, there is actually what is known as a Limited Liability Partnership, or LLP. Unlike with an LLC, in an LLP the partners remain personally liable for the debts and liabilities of the business.

In an LLP, all the partners need to share in decision-making, as well as sharing in whatever profits or losses the business sustains. There is less corporate protection than there is in a traditional LLC. You also don’t have the flexibility to decide which owners do what, the way you do with an LLC. You can’t have partners that silently, from the background, contribute money or assets, or an in-kind contribution (like free rent or equipment usage), the way that you can with an LLC.


You may also opt for a limited liability limited partnership, or LLLP. This is a partnership where one or more partners is “silent”—the partner who does not work, and may not contribute directly to working for the businesses but may contribute the capital or money to help the business run.

With an LLLP, some, but not all, owners or managers must have personal liability for things the business does. This is better than an LLP, where all owners must maintain this personal liability, but not as good as an LLC, where no members or owners would have personal liability or what the business does.

Note that a company or business entity cannot be one of the owners, managers or partners in an LLLP. A business can be an owner, in the other forms of LLC.

What kind of business is best for you? Call our Fort Lauderdale business lawyers at Sweeney Law P.A. at 954-440-3993 today.

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