How to Form a LLP in North Carolina?

Where You Need a Lawyer:

(This may not be the same place you live)

At No Cost! 

 Can You Form an LLP in Georgia?

In Georgia, as in all other states, a limited liability partnership (“LLP”) is a business arrangement that is available to business partners to receive legal protections from personal liability for the obligations and liabilities of the LLP and the other partners.

An LLP is one type of business arrangement that a prospective or new business owner can choose when organizing their company in Georgia. In terms of business management structures, a partnership is an association of two or more people who agree to carry on as co-owners of a business for profit. In order to understand limited liability partnerships, an individual should first understand general partnerships and limited partnerships.

General partnerships are the most common type of partnership, as they are formed by the association of two or more people intending to be co-owners for a profit. In a general partnership, all of the general partners will share in all of the limited partnership’s profits, losses, and liabilities.

The defining difference between a general partnership and a limited partnership would be that all of the partners in a general partnership can be held individually and jointly responsible for any of the debts and liabilities incurred by the partnership. This is not true for limited partnerships.

In contrast, in a limited partnership, there are both limited partners and general partners. Limited partners are not typically responsible for debts and liabilities incurred by the partnership. Importantly, while there may be one or more of either type of partner, there must be at least one general partner. The general partner is commonly responsible for management decisions and day-to-day operations.

In limited partnerships, limited partners are only responsible for investment duties and have limited authority over the partnership. Additionally, limited partners are only liable up to the amount they have contributed to the partnership. In contrast, general partners are responsible for all of the debts and liabilities of the limited partnership.

Limited liability partnerships are an especially popular business management structure that is reserved for licensed professionals. LLPs are business entities that are created by Georgia State law in the jurisdiction in which they are formed.

One of the main advantages of forming LLPs is that they provide owners with limited liability. This means the partners are not typically liable for anything other than their own investment in their business. Many business owners choose LLPs if they wish to protect their personal property.

The LLP is generally the preferred business model for licensed professionals. Licensed professionals who are permitted to form LLPs in the State of Georgia include the following:

  • Doctors;
  • Lawyers;
  • Dentists;
  • Accountants;
  • Therapists, psychiatrists, or psychologists; and
  • Design professionals, such as engineers or architects.

Forming a Georgia LLP offers significant advantages to partners. Additionally, should the partners register a Georgia LLP, they will be offered additional protections, which are discussed below.

What Paperwork Do I Need to Form a LLP?

In order to form a valid Limited Liability Partnership in Georgia, prospective business partners will need to first file a Certificate of Limited Liability Partnership with the Georgia Secretary of State that contains the following information:

  • The proposed name of the LLP;
    • It is important to note that prospective partners may reserve a name for their LLP by submitting a “Name Reservation Request form” along with a filing fee of $25. If the name is approved, the prospective business partners will then have a name reservation that is valid for 30 days or until they file the Certificate of Limited Liability Partnership documents;
  • The address of the principal office for the LLP;
  • The name and address of the registered agent;
    • It is important to note that the registered agent must be a citizen of Georgia;
  • The names and addresses of all of the partners; and
  • The management structure of the LLP.

It is important to also note that in addition to the above requirements for LLP registration, the certificate of limited partnership must be signed by all general partners stated in the certificate. One exception is that an attorney, in fact, for a general partner may sign on that general partner’s behalf. The process of signing the certificate is known as an Election.

Once the Election has been completed, the certificate of limited partnership will then need to be filed online or mailed to the Corporations Division of the Secretary of State’s office. Finally, the appropriate filing fee of $100 for online submissions or $110 for mail or hand-delivery will also need to be paid.

What Benefits Does Georgia Give to a LLP?

One defining advantage of a limited liability partnership in Georgia would be that the partners are not personally liable for the partnership’s actions. As such, limited partners cannot be forced to pay a business debt or liability with their personal property or assets. As such, their personal assets are shielded from all business liability.

An LLP also has considerably flexible management roles for the partners, defined in the LLP agreement that the partners draft themselves. Under a LLP arrangement structure, each partner has the right to manage the LLP, as well as the right to choose how much management they personally want. As such, partners can be active in their role or act as silent partners in the LLP.

Another considerable benefit Georgia provides LLPs would be pass-through taxation. The pass-through tax helps partners avoid double taxation. This means that LLP partners will only pay their own personal income taxes, while the LLP will not be taxed as a business entity. In other words, the LLP is not responsible for paying federal income tax or the Georgia net worth state tax.

Other common benefits of LLPs in Georgia include not having to file an annual report and, likewise, not having to renew the Election.

What Disadvantages Does Georgia Give to a LLP?

Although the State of Georgia offers numerous advantages to LLPs, there are also disadvantages to forming an LLP in Georgia. It is also important to note that Georgia law does not protect limited liability partners from all business liabilities. This means a limited partner may still be held personally liable if they:

  • Engage in misconduct
  • Are negligent
  • Personally guarantee a debt

As such, limited partners in a limited liability partnership in Georgia should seriously consider purchasing liability insurance in order to help offset their personal liability risk. Limited partners may also consider utilizing another business structure that offers more protections, such as limited liability corporation.

Additionally, when one of the partners dies, the limited liability partnership may automatically end. Although the other partners can start the business as a new limited liability partnership, the current limited liability partnership cannot generally continue upon the death of one of the partners.

Finally, unless there is a properly drafted partnership agreement, partners in a limited liability partnership do not have to consult with the other partners when they make decisions concerning the business operations of the LLP. This means that any partner is free to act on behalf of the LLP. This could result in legal issues regarding the liability exposure for the partners in the limited liability partnership.

Should I Hire a Lawyer?

It is in your best interests to consult with a Georgia corporate lawyer for any issues, questions, or concerns you may have related to forming a limited liability partnership in Georgia. An experienced Georgia corporate lawyer can advise you regarding the laws in Georgia that apply to your business.

An experienced corporate lawyer can also explain your rights and obligations in the limited liability partnership and assist you with completing and filing the required forms. An attorney can also help you draft a unique partnership agreement that best serves the interests of your business. Finally, should any legal issues arise regarding the partnership’s liability or your own personal liability, an attorney can also represent you in court, as needed.

star-badge.png

16 people have successfully posted their cases

Find a Lawyer