LLC versus LLP    Revised on 5/7/10

About the difference between an LLC and an LLP. LLC versus LLP. First, there are both state created entities.  There are both like partnerships if you want them to run as such but an LLP ( limited liability partnership) is of course  more like a general partnership because it is structrured as such.   As an attorney, I never recommend an LLP over an LLC simply because if the complicated legal structure of the LLP.  Thus, bottom line is that it is better to form an LLC versus forming an LLP.

LLC versus LLP: Which Protects you the Most?

The difference between an llc and llp are outlined below so you can make the right choice: LLCs and LLPs offer the same level of liability protection and security. More specifically, both LLCs and LLPs protect owners from legal risks arising from the activities of the LLC or LLP in business matters.

HERE IS THE DELAWARE LAW ABOUT LIMITED LIABILITY COMPANIES

TITLE 6

Commerce and Trade

 "Go with the LLC."   Both LLCs and LLPs are formed at the state level.

I can tell you from the begining that there are few if any benefits of an LLP vs an LLC.  Just form an LLC without questioning much.

You create the new state sanctioned corporate entity by filing articles with the home state's Secretary of State office. The process varies from state to state, but the forms and paperwork are similar.   The forms name the new corporate entity, provide an overview of the business's activities, and has information about the partner memebers setting up the new venture.

SUBTITLE II

Other Laws Relating to Commerce and Trade

CHAPTER 18. LIMITED LIABILITY COMPANY ACT

Subchapter II. Formation; Certificate of Formation

§ 18-201. Certificate of formation.

(a) In order to form a limited liability company, 1 or more authorized persons must execute a certificate of formation. The certificate of formation shall be filed in the office of the Secretary of State and set forth:

(1) The name of the limited liability company;

(2) The address of the registered office and the name and address of the registered agent for service of process required to be maintained by § 18-104 of this title; and

(3) Any other matters the members determine to include therein.

(b) A limited liability company is formed at the time of the filing of the initial certificate of formation in the office of the Secretary of State or at any later date or time specified in the certificate of formation if, in either case, there has been substantial compliance with the requirements of this section. A limited liability company formed under this chapter shall be a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited liability company's certificate of formation.

(c) The filing of the certificate of formation in the office of the Secretary of State shall make it unnecessary to file any other documents under Chapter 31 of this title.

(d) A limited liability company agreement shall be entered into or otherwise existing either before, after or at the time of the filing of a certificate of formation and, whether entered into or otherwise existing before, after or at the time of such filing, may be made effective as of the formation of the limited liability company or at such other time or date as provided in or reflected by the limited liability company agreement.

Here's the answer to that question: (05) - First of all, it is recommended that you form a corporate entity such as an LLC or Corporation. Form an LLC because your use of workers makes you an employer and thus subject to federal and state unemployment and employment taxes as well as Medicare, and social security taxes. By the way, your employers may sue you for several reasons including sexual harassment and discrimination. Hence, your need to file an LLC. With that in mind, you are required to obtain a federal and state employment tax identification number, also called a fed EIN, and state ein. In addition, you need to get and pay business tax. Business tax is a flat tax you pay usually per year / annually and it sometimes called business occupational tax or a business license. Furthermore, your use of a trade name makes subject to trade name registration. A trade name is called different other terms in the USA, but most commonly it is called a DBA, fictitious business name or assumed business name. Is short, you need to register your trade business name at the state clerk, county clerk or city clerk. Since you are getting a federal tax id number use it instead of you social security number to open a bank account. Also, note that forming an LLC or incorporating will shield your unintentional personal business related actions. Form an LLC and you will be separated from being liable for personal civil liability as well as help you avoid business debt related lawsuit against you and your personal assets for debts you obtained for the business and have signed as an officer of the corporation or an LLC. In short, get an LLC limited liability company, get a federal tax id and a state tax id employer number, and register your business with a business license and you will be ready to start your business.

The LLC versus LLP question can be determined by the structure and  of legal protection afforded by  the LLC or the LLP because the two are so similar...

 Differences between an LLC and LLP as far As Taxes are Concerned?

In general, LLCs and LLPs receive similar income tax accounting treatment.   Both LLCs and LLPs would usually be treated  as partnerships.  Also, both LLCs and LLPs usually also have the option to fill out an IRS form and elect to be treated as regular "C" corporations or as "S" corporations.

Normally, a partnership tax accounting treatment saves taxes and makes it easy to form and dissolve an LLP or LLC  business entity.   So this tax benefit is available both to LLCs and LLPs.  That of itself does not provide for the difference between an llc and llp.

Which Formation is the Best?

Deciding on the best formation for the business you are into, will depend on your personal circumstances and the way you are proposing to run the business. If you provide a large personal amount of capital to start the company, as an individual and you alone are going to be liable for the liabilities so it is better to form an LLC. This will limit your liability to the extent of the capital you have assigned to the LLC. However if you have made any personal guarantees while arranging loans or credit for your business, such as signing as an individual, these guarantees will have to be paid by yourself alone.  You are liable for them.

When an LLC or an LLP engages in some business related matter such as having a store open to the public, it makes it liable to lawsuits but the LLC owners are not liable.    For example, the owners of the LLC (called members) and the owners of the LLP (called partners) are not severally and not jointly  liability as a result of their ownership status. In a sense, the owners of a LLC or LLP get the same protection that shareholders of a corporation do.

$100-$500 depending who forms it for you.