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Limited Liability Partnerships

The limited liability partnership (LLP) emerged as a business form during the 1990s. This type of business entity is similar to a general partnership in that each partner may share in the management of the business and that each partner shares in the profits. However, unlike a general partnership, partners in an LLP do not incur personal liability for claims that are brought related to the actions of a copartner. Moreover, this form of business shields a partner from liability for the acts of the partnership’s employees or agents. On the other hand, a partner in an LLP is liable for his or her own negligence or malfeasance and the negligence and malfeasance of anyone under the supervision and control of the partner.

Owners of an LLP register the business by filing a registration with the appropriate state authority, usually the secretary of state. Owners of an LLP may be required to prove that the entity has adequate liability insurance or assets to satisfy claims that may be brought against the business. This type of partnership must include the word “Registered Limited Liability Partnership” or the initials “LLP” in its name.

Every state now allows businesses to form as LLPs. The NCCUSL in 1996 amended the Uniform Partnership Act (UPA) to include sections governing limited liability partnerships. The majority of states have adopted the revised UPA.

Inside Limited Liability Partnerships