Limited Liability Corporations Versus Limited Liability Partnerships

As a follow up to today’s Practice Management Workshop, I wanted to offer some more resources to clarify the difference between Limited Liability Corporations and Limited Liability Partnerships. Page 200 - 202 in the Architect’s Handbook of Professional Practice gives information on all the different firm legal structures. Another source that specifically compares and contrasts the liability of LLC and LLPs can be found here: LLC vs. LLP: What is the Difference? | Nolo

And states:

“Both an LLC and an LLP provide some protection against personal liability, reducing each partner’s or member’s liability to the amount they invested in the business. Generally speaking, an LLC provides the most liability protection. Except for cases of business mismanagement, the members are not personally responsible if the LLC is sued or owes any debt. This serves to protect personal assets like members’ houses, bank accounts, and cars.

After formed, the partners of an LLP may have limited liability like an LLC, but this depends on the state where you filed. In some states, an LLP only provides protection from being responsible for another partner’s negligent acts, but the partners remain personally responsible for the overall debts and obligations of the business. Further, some states require at least one partner to have unlimited personal liability, while other partners are protected.”

I think this helps clarify a little more than the AHPP why an LLC provides more protection than an LLP as the level of protection for an LLP depends on the state you are in.

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