UNDERSTANDING PARTNERSHIP AS AN ENTITY CHOICE
With an Experienced and Knowledgeable Los Angeles Business Attorney
Three types of partnerships exist: general partnership, limited partnership, and limited liability partnerships. Each partnership structure possesses its own characteristics, and some forms of partnerships are not accessible to everyone opening a business. Partnerships are governed by the California Corporations Code and unless you have an experienced attorney you may form an unintended partnership. That is why it is vital to contact counsel to determine the proper steps, documents, and agreements you need to form the type of partnership that fits your business.
Prevent an unintended partnership forming by calling The Law Office of Eric J. Proos, P.C. today at (213) 784-3640.
General partnerships are the first type of partnerships to be address. A general partnership has the following characteristics:
General partners are liable for all business debts, including court judgments.
Each general partner in a general partnership can be sued for the full amount of any business debts.
Any individual partner in a general partnership can bind the entire business to a contract as long as the contract was to carry out the ordinary course of business.
Many companies form as general partnerships. The Law Office of Eric J. Proos, P.C. can make sure your general partnership is formed the proper way with proper documentation and agreements so all partners are on the same page.
Limited partnerships offer a hybrid of general partnerships and limited partnerships. A limited partner is someone who does not have the same power as a general partner. That is why that partner is “limited”. A limited partnership possess the following characteristics:
A limited partnership consists of a general partner and a limited partner.
The general partner has the same role as in a general partnership. A general partner can bind the limited partnership to contracts and is personally liable.
The limited partner contributes financially to the limited partnership, but has limited control over the business decisions and operations, and NORMALLY cannot bind the partnership to business deals (there are exceptions).
The limited partner receives the benefit of protection from personal liability, but as stated above, there are exceptions.
Limited Liability Partnerships (LLP)
Ever wonder why law firms, accounting firms, and some other professional service firms are all limited liability partnerships, LLPs? The Law Office of Eric J. Proos, P.C. will address that question and some other characteristics of limited liability partnerships, LLPs.
Limited Liability Partnerships, LLPs, are only available to professionals such as accountants, lawyers, and architects.
Limited Liability Partnerships, LLPs, provide all of its owner with limited personal liability.
In order to form a Limited Liability Partnership, LLP, there is a $70 filing fee and minimum tax payment of $800. You must complete and file Form LLP-1 with the California Secretary of State.
Any income that the Limited Liability Partnership, LLP, earns is treated as pass through income. However, the limited liability partnership, LLP, may elect to be taxed like a corporation.
No matter which partnership structure your company chooses, a partnership agreement should be drafted and entered into by the partners.
Los Angeles business attorney at The Law Office of Eric J. Proos, P.C., can help you and your partnership. Call today for a free 30-minute consultation at (213) 784-3640.