Business Entity Filing

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General Partnership

a partnership in which all the partners are jointly liable for the debts of the partnership. It is typically created by agreement rather than being created by a public filing.

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Limited Liability Limited Partnership
LLLP

 a combination of LP and LLP, available in some states

The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership, a form of business entity recognized under U.S. commercial law. An LLLP is a limited partnership and as such consists of one or more general partners and one or more limited partners. The general partners manage the LLLP, while typically the limited partners only have a financial interest.

The difference between an LLLP and a traditional LP is with respect to the general partner's liability for the debts and obligations of the limited partnership. In a traditional limited partnership the general partners are jointly and severally liable for the debts and obligations of the limited partnership; limited partners are not liable for those debts and obligations beyond the amount of their respective capital contributions.

In an LLLP, by having the limited partnership make an election under state law, the general partners are afforded limited liability for the debts and obligations of the limited partnership that arise during the period that the LLLP election is in place. Certain LLLP elections take the form of the limited partnership electing to be a limited liability partnership (this is the format used in, for example,Delaware) while in other states the election is made in the certificate of limited partnership (examples being Florida, Hawaii and Kentucky). Most states require that an LLLP identify itself in its name, but those requirements are not universal.

Because the LLLP is so new, its use is not widespread. Arkansas, Colorado, Delaware, Florida, Georgia, Maryland, Nevada, Texas, and Kentucky  all have adopted statutes that allow for the formation of LLLPs, usually as a conversion of an existing LP (the general partners might want to do this to reduce their legal liability).

The filing fees of an LLLP vs. a limited partnership are at times higher. In the case of Nevada, the Secretary of State charges $75 to register a limited partnership and $100 to register an LLLP. Additionally, the initial and annual report filing for an LLLP in Nevada is $175 vs. $125 for a limited partnership. Conversely, in Kentucky the filing fee for a limited partnership is no higher if the partnership elects to be an LLLP.

LLLPs are most common in the real estate business, although other businesses can use the form as well, for example, CNN. There exist significant questions regarding whether the limited liability provided general partners by the LLLP election will be effective in states that do not have an LLLP statute.

States with LLLP enabling statutes:

• Alaska • Hawaii • Nevada
• Arizona • Idaho • North Carolina
• Arkansas • Iowa • North Dakota
• Colorado • Kentucky • Pennsylvania
• Delaware • Maryland • South Dakota
• Florida • Minnesota • Texas
• Georgia • Missouri • Virginia

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Limited Liability Partnership
LLP

limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of a limited partnership. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have at least one "general partner" with unlimited liability. Unlike corporate shareholders, the partners have the right to manage the business directly. As opposed to that, corporate shareholders have to elect a board of directors under the laws of various state charters. The board organizes itself (also under the laws of the various state charters) and hires corporate officers who then have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. An LLP also contains a different level of tax liability from that of a corporation.

Limited liability partnerships are distinct from limited partnerships in some countries, which may allow all LLP partners to have limited liability, while a limited partnership may require at least one unlimited partner and allow others to assume the role of a passive and limited liability investor. As a result, in these countries the LLP is more suited for businesses where all investors wish to take an active role in management.

There is considerable confusion between LLPs as constituted in the U.S. and that introduced in the UK in 2001 and adopted elsewhere - see below - since the UK LLP is, despite the name, specifically legislated as a Corporate body rather than a Partnership.

In the United States, each individual state has its own law governing their formation. Limited liability partnerships emerged in the early 1990s: while only two states allowed LLPs in 1992, over forty had adopted LLP statutes by the time LLPs were added to the Uniform Parntership Act in 1996.

The limited liability partnership was formed in the aftermath of the collapse of real estate and energy prices in Texas in the 1980s. This collapse led to a large wave of bank and savings and loan failures. Because the amounts recoverable from the banks was small, efforts were made to recover assets from the lawyers and accountants that had advised the banks in the early-1980s. The reason was that partners in law and accounting firms were subject to the possibility of huge claims which would bankrupt them personally, and the first LLP laws were passed to shield innocent members of these partnerships from liability.

Although found in many business fields, the LLP is an especially popular form of organization among professionals, particularly lawyers, accountants, and architects. In some U.S. states, namely California, New York, Oregon, and Nevada, LLPs can only be formed for such professional uses. Formation of an LLP typically requires filing certificates with the county and state offices. Although specific rules vary from state to state, all states have passed variations of the Revised Uniform Partnership Act.

The liability of the partners varies from state to state. Section 306(c) of the Revised Uniform Partnership Act (1997)(RUPA) (a standard statute adopted by a majority of the states) grants LLPs a form of limited liability similar to that of a corporation:

An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for such an obligation solely by reason of being or so acting as a partner.

However, a sizable minority of states only extend such protection against negligence claims, meaning that partners in an LLP can be personally liable for contract and intentional tort claims brought against the LLP. While Tennessee and West Virginia have otherwise adopted RUPA, their respective adoptions of Section 306 depart from the uniform language, and only a partial liability shield is provided.

As in a partnership or limited liability company (LLC), the profits of an LLP are allocated among the partners for tax purposes, avoiding the problem of "double taxation" often found in corporations.

Some US states have combined the LP and LLP forms to create limited liability limited partnerships.

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Limited Partnership
LP.

a partnership where at least one partner has unlimited liability and one or more partners have limited liability

A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). It is a partnership in which only one partner is required to be a general partner.

The GPs are, in all major respects, in the same legal position as partners in a conventional firm, i.e. they have

management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liability for the debts of the partnership.

As in a general partnership, the GPs have actual authority as agents of the firm to bind all the other partners in contracts with third parties that are in the ordinary course of the partnership's business. As with a general partnership, "An act of a general partner which is not apparently for carrying on in the ordinary course the limited partnership's activities or activities of the kind carried on by the limited partnership binds the limited partnership only if the act was actually authorized by all the other partners."[2]

Like shareholders in a corporation, LPs have limited liability, meaning they are only liable on debts incurred by the firm to the extent of their registered investment and have no management authority. The GPs pay the LPs a return on their investment (similar to a dividend), the nature and extent of which is usually defined in the partnership agreement. General Partners thus carry more liability, and in cases of financial misfortune, the GP becomes "the generous partner".

Limited partnerships are distinct from limited liability partnerships, in which all partners have limited liability.

When the partnership is being constituted or the composition of the firm is changing, LPs are generally required to file documents with the relevant state registration office. LPs must also explicitly disclose their LP status when dealing with other parties, so that such parties are on notice that the individual negotiating with them carries limited liability. It is customary that the notepaper, other documentation, and electronic materials issued to the public by the firm will carry a clear statement identifying the legal nature of the firm and listing the partners separately as general and limited. Hence, unlike the GPs, the LPs do not have inherent agency authority to bind the firm unless they are subsequently held out as agents and so create an agency by estoppel or acts of ratification by the firm create ostensible authority.

In some jurisdictions, the limited liability of the LPs is contingent on their not participating in management.

In the United States, the LP organization is most common in the film industry and real estate investment projects or in types of businesses that focus on a single or limited-term project. They are also useful in "labor-capital" partnerships, where one or more financial backers prefer to contribute money or resources while the other partner performs the actual work. In such situations, liability is the driving concern behind the choice of LP status. The LP is also attractive to firms wishing to provide shares to many individuals without the additional tax liability of a corporation. Private equity companies almost exclusively use a combination of general and limited partners for their investment funds. Well-known limited partnerships include Enterprise GP Holdings, Carnegie Steel Company, Bloomberg L.P. and CNN.

In some states, an LP can elect to become a limited liability partnership (or LLP). In this arrangement, the general partners are liable only for the business debts of the company, and not for acts of malpractice or other wrongdoing done by the other partners in the course of the partnership's business.

Prior to 2001, the limited liability enjoyed by LPs was contingent upon their refraining from taking any active role in the management of the firm. However, Section 303 of the Revised Uniform Limited Partnership Act eliminates the so-called "control rule" with respect to personal liability for entity obligations and brings limited partners into parity with LLC members, LLP partners and corporate shareholders.

The 2001 amendments to the Uniform Limited Partnership Act also permitted limited partnerships to become Limited Liability Limited Partnerships. Under this form, debts of a limited liability limited partnership are solely the responsibility of the partnership, thereby removing general-partner liability for partnership obligations. This was in response to the common practice of naming a limited-liability entity as a 1% general partner that controlled the limited partnership and organizing the managers as limited partners. This practice granted a limited partnership de facto limited liability under the partnership structure.

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