The limited liability partnership, or “LLP”, business model is designed to protect partners from the negligence or misconduct of other partners. The LLP model is preferred by professional associations such as law and accounting firms. The partners to the LLP do, however, remain obligated to pay the normal debts and obligations of the LLP.
Like many states, Connecticut has chosen to follow the Uniform Partnership Act to regulate partnerships, including the LLP model.
As the word “partnership” indicates it generally takes two or more individuals to form a LLP and the LLP is required to file the paperwork discussed below as needed. These are the only requirements of a LLP. LLPs, as with most partnership business models, are designed to by relatively easy to form and operate.
A LLP may need to file many forms with Connecticut during its lifetime. These forms may include:
- Certificate of Limited Liability Partnership (the creation document for the LLP),
- Certificate of Amendment (filed when major changes occur, such as the selection of a new business formation),
- Change of Agent (and Change of Agent’s Address),
- Change of Business Address,
- Renunciation of Status Report (filed when the LLP is winding down its business operations), and
- Application for Reservation of Name (used to hold a name for the LLP).
LLPs must be aware of when a filing is required. Failure to file a relevant form could lead to the LLP losing its LLP designation. Contact an experienced business lawyer to discuss the filing obligations of your LLP if you have any questions or concerns.
LLPs, like all partnerships, are taxed only at the personal income level. The income of the partnership is the income of the partners and, therefore, is only taxed once when each partner files his or her respective personal taxes.
As discussed above, the partners of a LLP are not liable for the negligent misconduct of other partners. Therefore, the LLP model is advantageous for lawyers, accountants and other professionals. If one partner becomes liable for a negligent act the other partners are usually unaffected.
While the partners of a LLP are not liable for the negligent acts of other partners they are still liable for the debts and obligations of the LLP that arise during the LLP’s normal course of business. For example, the partners of the LLP would all be liable for an office lease agreement entered by the LLP.
If you need help forming a LLP, then contact a Connecticut business lawyer today if you have any concerns about the formation or operation of your LLP.