Chapter 43 LPs, LLCs, and LLPs

2 Limited Partnerships A limited partnership consists of one or more limited partners, and one or more general partners. A limited partnership consists of one or more limited partners, and one or more general partners. Limited partners contribute assets or services with no liability for loss beyond their investment, but do not manage the business Limited partners contribute assets or services with no liability for loss beyond their investment, but do not manage the business General partners manage the business and have unlimited personal liability. General partners manage the business and have unlimited personal liability. A certificate must be properly executed and filed when a limited partnership is formed. A certificate must be properly executed and filed when a limited partnership is formed.

3 Limited Liability Companies A limited liability company is a hybrid form of business organization that combines the tax advantages of a partnership with the limited liability feature of the corporation. A limited liability company is a hybrid form of business organization that combines the tax advantages of a partnership with the limited liability feature of the corporation. Distributions: profits and losses are shared according to the LLC operating agreement. Distributions: profits and losses are shared according to the LLC operating agreement. Property: LLC owns property in its own name. Property: LLC owns property in its own name.  Interest in an LLC is personal and assignable.

4 Limited Liability Companies Disregarding the LLC entity. Disregarding the LLC entity.  Similar to ‘piercing the veil’ of corporations.  Members may be personally liable even beyond their capital investment. LLCs and other entities. LLCs and other entities.  LLCs vs. Sub-S corporations.  LLCs vs. Limited Partnerships.

5 Limited Liability Partnership A limited liability partnership is a new form of business organization that allows existing partnerships to convert to this new form without major renegotiation of the underlying partnership agreement. A limited liability partnership is a new form of business organization that allows existing partnerships to convert to this new form without major renegotiation of the underlying partnership agreement. Innocent partners in a limited liability partnership are not personally liable for the torts of other partners beyond their investment in the firm. Innocent partners in a limited liability partnership are not personally liable for the torts of other partners beyond their investment in the firm.

6 Comparison of Business Forms