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Limited Liability Partnership

Limited Liability Partnership

What is a Limited Liability Partnership?

A limited liability partnership is a business structure that is essentially a general partnership, with one key difference. Unlike a general partnership, where individual partners are completely liable for the formation’s debts and obligations, a limited liability partnership will provide individual partners protection against personal liability and distinct partnership liabilities.
A limited liability partnership provides its owners with limited personal liability. Limited liability partnerships are beneficial for professional groups, such as attorneys or accountants. In fact, in some U.S. states (such as California, New York and Nevada) a limited liability partnership can only be formed for professional purposes. Professionals often prefer a limited liability partnership because they will not be personal liable for another partner’s problems, particularly obligations attached to lawsuits or debts. A limited liability partnership will protect each partner from debt obligations against the formation. The laws surrounding the formation and activity of a limited liability partnership will vary from state to state and country to country.
Limited Liability Partnerships in the United States:

In the United States, individual states implement their own laws to govern the formation of a limited liability partnership. Limited liability partnerships first emerged in 1991, through the passing of a Texas statute. Texas passed this legislation to curb liability issues that ran rampant in partnership formations.
Limited liability partnerships were structured following the collapse of the real estate and energy markets in Texas. This collapse led to a tidal wave of savings and loan failures. Because the amounts recoverable by financial institutions were relatively small, efforts were made to recover funds from the accountants and lawyers who advised the institutions during this time. 
Lawyers and accountants were liable and thus subject to the possibility of huge claims that would ultimately bankrupt them personally. Not only were the responsible professionals liable for these claims, but their partners were also required to fulfill debt obligations—partnership laws To mitigate these issues, limited liability partnership laws were passed to protect innocent members of these partnerships from debt obligations.
The laws surrounding the formation of a limited liability partnership will vary from state to state. Section 306 © of the Revised Uniform Protection Act is the standard statute adopted by bulk of states in the U.S.—this legislation grants a limited liability partnership with a form limited liability protection similar to that of a corporation. The legislation states the following:
An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for such an obligation solely by reason of being or so acting as a partner.
Some states will implement their own laws—in addition to those provided by the above legislation—to govern the formation and activity of a limited liability partnership. For instance, some states will only provide liability protection against negligence claims. This provision states that partners in a Limited Liability Partnership can be held personally liable for intentional tort and contract claims brought against the broader formation.
As is common with a partnership or a limited liability company, the profits generated by a limited liability partnership are allocated among the partners for tax obligations. This avoids the double taxation problem often found in the corporate business model.

How to Start a Limited Liability Partnership:

As stated above, a limited liability partnership will protect the personal wealth of each member in the formation. Moreover, the limited liability partnership provides protection against lawsuits that may arise because the actions of individual members of the partnership. Limited liability partnerships are typically registered following the formation of a partnership. The following steps are required to form limited liability partnerships:
1. Contact your local government’s business division to locate the correct legal documents for your filing—remember each state implements their own rules and regulations regarding the formation of a limited liability partnership. Not all states require specific forms, but most do.
2. Satisfy your state’s insurance or licensing requirements; these requirements will vary by state, but are mandated regardless of the intricacies associated.
3. File all forms required by the state. The majority of states require the partnership name to include the words “limited liability partnership or “LLP” as an abbreviation.
4. File the forms with the attached fees. The majority of states will charge a flat annual registration fee, but others may charge a fee based on the number of partners listed on the limited liability partnership form.
5. After you have filed the forms, wait for the notification of receipt and acknowledgment. Once you receive this document your partnership is now classified as a limited liability partnership with all the appropriate rights and responsibilities attached.
The following is an example of the requirements necessary for registration in the state of New York (remember New York requires only professionals to form a limited liability partnership):
In New York, a partnership, without limited partners, whose partners is a professionals authorized by law to offer professional services, may register as a limited liability partnership with the Department of State by filing a Certification of Registration according to Section 121-500(a) of Partnership Law.
The state of New York requires that within 120 days after the filing of a certificate of registration, a limited liability partnership must publish—in two media publications—a copy of the certificate of registration or a notice related to the registration. The publications (i.e. newspapers) must be designated by the county clerk’s office where the principal office of the limited liability partnership is located—as defined in the certificate of registration. Once published, the printer of the publication will provide the partners of the LLP with an affidavit of publication. The certificate of publication—with the affidavit attached—must be submitted to the New York Department of State.

Pros and Cons of an LLP:
Limited liability partnerships are businesses created under the organizational structure of a general partnership. Limited liability partnerships provide companies the same taxation features as standard partnerships; however, each partner is awarded liability protection against the maneuvers of their partners.
The most notable advantage offered by a limited liability partnership is that the formation limits the liability of a partner to the individual’s actions; the partner is protected from liability issues that arise as a result of his or her partner’s negligence or misconduct.
In addition to liability benefits, a limited liability partnership is easier to create than other business formations. An LLP does not have the strict filing requirements that a state will place on other types of businesses. Moreover, state laws do not require that the partnership be recreated if a new partner is added or existing partners are moved.
Although a partner is not liable for other partner’s actions, all partners are responsible for the general obligations of the formation—individual partners are accountable for the limited liability partnership’s operating expenses and other debt obligations (vehicle leases, property leases and business loans). The liability protection offered by the formation also does not provide a shield for fraud claims or the actions of the LLP’s employees. Moreover, individual partners are also not protected if they are a part of or witness another partner’s criminal actions.


Taxation Benefits Associated with the LLP:

Entities operating as a limited liability partnership are taxed under the partnership classification by the IRS through the pass-through taxation process. Under this classification, the company’s profits are passed down to the partners who are then required to report their individual earnings on their tax returns. This process enables the entity’s profits to skip the corporate level, thus avoiding a federal income obligation.
Disadvantages Associated with an LLP

Because of the multifarious nature of LLP laws, limited liability protection formations are not available to all businessmen—as stated above, a limited liability partnership may be only available to professionals, such as attorneys, doctors, architects or accountants. Furthermore, dissimilar to limited liability companies—which have perpetual life—a limited liability partnership may be terminated or dissolved when the general partner leaves the business. This, however, can be prevented if a partnership agreement is formed that affirms a process if such a situation arises.

Limited Liability Partnership Agreements:

A limited liability partnership agreement is no a legal requirement, however, owners of a limited liability partnership should create one to avoid a number of state-imposed restrictions. The limited liability partnership agreement establishes the provisions and conditions of the relationship between the partners of the formation. By placing these provisions in writing, future conflicts can be resolved; the partnership agreement is used as the framework to mitigate problems associated with distribution, liability and management. Although partners can agree on anything—and subsequently affirm these agreements in the agreement—the minimum articles for a limited liability partnership are strongly suggested:
Purpose and Name of the Limited Liability Partnership:

All of the LLP’s partners should be documented in the partnership agreement. Some states will not place a limit on the number of partners that can be included in the Limited Liability Partnership, however, the majority of states will limit the formation in terms of numbers or occupation—as stated above, some states reserve the formation to only professionals that are licensed to do business in the particular state. Furthermore, the nature of the limited liability partnership should be outlined to avoid deviation from the formation’s stated purpose.
The date the partnership officially formed and the expected duration of the business should also be included in the partnership agreement. In most instances, a partnership is dissolved after the death of its partners, however, because a limited liability partnership can have unlimited partners (in some cases) additional provisions can be attached in the agreement to address the transfer of ownership and how the formation will proceed if members leave or pass away.


Capital Contributions:
The limited liability partnership agreement should elucidate on the amount of funds and non-cash contributions that each individual partner is responsible for. Non-cash contributions will include services, furnishings, time, rental space, goods or other types of property that can be utilized by the business. Each partner’s contribution should be noted in the partnership agreement to help organize a distribution plan and to relegate decisions aligned with the formation.

Non-Profit Corporation At A Glance

Non-Profit Corporation At A Glance

Non-profit corporations have a similar structure to other types
of corporations. Both entities will have leadership, as well as employees that
answer to those in management. Corporations will likely have profit, while non-profit
corporations have income which is then funneled back into the operations of
that organization. Those monies are then used to meet the goals of the non-profit
corporation, as well as paying the salaries of those employed there.

 

Non-profit corporations will likely take income and distribute
it as a percentage into several different pools. The first pool will be the
fees required to fund the operations of the organization, such as
administrative fees and costs. The next pool will include the materials and
work necessary to meet the goals of the organization. For example, this pool
would include monies for supplies in the field in organizations that assist individuals
after a natural disaster. The last pool would be monies used to pay the
salaries of the management and employees of that organization.

 

The monies brought in by a corporation, on the other hand, are
used in a different way. The salaries of those that work there must be paid
with the profit of a company, and those salaries would not likely be
capped as they generally are in a for profit corporation. In addition, the
profits of the company must pay for administrative costs and supplies, as well
as pay for the building where the company exists.

 

How to Start a Non-Profit Organization?

How to Start a Non-Profit Organization?

Each jurisdiction may have differing rules for starting a non-profit.
However, in most cases, the individual that is working towards starting a non-profit
may need to follow a specific list of steps while adhering to the laws in that
particular jurisdiction.

 

When one wonders how to start a non-profit organization, they
must first conduct research about all applicable local and Federal
laws.  They need to first select a name for their organization and then
check that the name is not in use. The individual must then have a very specific
list of the goals for the non-profit organization, including those which apply
on the local or global level.

 

After those steps have been completed, the individuals must apply
to register the non-profit organization. The registration of the organization
may include a fee to register the name and the organization. In addition, the
non-profit must apply for a license to operate in the justification where the
organization will be located.

 

When one is interested in how to start a non-profit
organization, they must conduct careful research. In addition to the basic
steps required to start any company or business, there are specific rules which
must be followed for non-profit organizations. If those rules are not
followed exactly, the non-profit organization may not achieve tax-exempt
statutes.

The Best Fundraising Ideas for Non-Profit Organizations?

The Best Fundraising Ideas for Non-Profit Organizations?

Non-profits rely on a variety of sources of income in order to
keep operations running, as well as payment to employees and other
expenses. That funding may come from grants or donations and fund-raising is
usually vital to the success of a non-profit organization. 

 

Fund-raising ideas for non-profit organizations may depend on
several factors. First, the type of organization may dictate the types of
fund-raising efforts which would be appropriate. For example, food pantries may
ask for donations, as well as hold food drives at which the local community can
bring specific types of goods.

 

However, fund-raising ideas for non-profits may include more
creative ideas, such as joining community efforts with the efforts of the non-profit
organization. For instance, the food pantry may ask local potters to make bowls
in their pottery shop. Those empty bowls may then be sold to the local
community as a representation of those that go hungry.

 

Fund-raising ideas for non-profit organizations may also be
dictated by local laws and regulations. For example, certain types of
fund-raising efforts may not be legal in certain jurisdictions. For instance,
some communities may prohibit door to door sales of candy, wrapping paper and
other items sold for fund-raising. However, the same community may allow those
efforts at storefronts, where volunteers can sell those items in front of the
local grocery store.

 

The Quick Facts About Corporate Law

The Quick Facts About Corporate Law

Corporate law is an extensive legal specialty. Corporations are the most common type of business entity in the United States. Corporate law is comprised of legislation and regulations that govern corporations and business entities. Many corporations maintain a permanent corporate lawyer to handle all legal issues that may arise. Corporate law frequently involves concerns regarding business licensing, labor law, business partnerships, investment regulations, and legal contracts.
Corporate law, including corporate finance, can be extremely confusing and overwhelming. Therefore, the owner of a business or a corporation should consult with a corporate lawyer regarding legal concerns. In addition, corporate law will govern asset liquidation if the corporation is not able to effectively address its debts. Stock shares and problems such as insider trading are also regulated by corporate law.  

Why Do Corporations Need Corporate Attorneys?

Why Do Corporations Need Corporate Attorneys?

A corporate attorney is one that works within a corporate setting and represents businesses for the legal needs. The responsibilities of an individual corporate attorney depend on the corporate environment in which he/she is employed and the overall needs of the corporation or business. For example, a corporate attorney can be employed do draft legal documents or contracts and not necessarily be involved in any kind of litigation.
Many large corporate businesses will oftentimes employ corporate attorneys exclusively and include them as a general member of the staff. These kinds of lawyers will have consulting responsibilities, providing for the best possible course of action of a business or company within a legal context.
Other lawyers can also be considered corporate attorneys. An example could be a tax lawyer that is employed by a corporate business. Because a corporation employs the attorney, the tax lawyer can also be considered to be a corporate attorney. 

Understanding Corporate Lobbying

Understanding Corporate Lobbying

Corporate lobbying is the act of corporations, businesses, and organizations attempting to influence or advocate a particular intention or goal to governmental officials and legislators. Through corporate lobbying, corporations will try to influence governmental actions, such as the passing of certain bills or regulations, to be done or passed in a way which is to benefit the business or organization’s interests.
Corporate lobbying can also be undertaken at the state and local levels as well, in order to influence either the passing or rejecting of certain legislation that is proposed or being entered into law. Through corporate lobbying, lobbyists for such organizations will often explain the goals of their respective organizations and the problems or benefits that certain legislation may present. Even though corporate lobbying is a legal practice, the government will oftentimes have certain regulations in place in regards to how corporate lobbying can be done and to what extent.  

Definition of Corporate Governance

Definition of Corporate Governance

The corporate governance definition establishes that corporate governance is the set of policies and rules concerning the governance of corporations, which is the means by which a given company or corporation is controlled or directed. The corporate governance definition thus includes elements such as internal rules and a statute regarding corporate governance, as well as governmental actions and laws implemented in order to control corporate governance and prevent improper control of companies.
For example, the Sarbanes-Oxley Act, which is a law in the United States of America, is an act which affects the ways in which companies can be managed and controlled. It was designed in reaction to the numerous financial scandals, such as Enron, which cropped up in the early parts of the millennial decade. The Sarbanes-Oxley Act would thus fall under the overall corporate governance definition which covers all such rules. The corporate governance definition can also be focused simply on the specific corporate governance of a company. 
Corporate governance is a matter of some importance for any and all corporations, especially because the corporate governance of a given company will very much determine public perception of that company. Corporate governance will generally include some means of serving any stake or shareholders who have some control over the company, although it may not include a direct route for these stake or shareholders to exert influence over the company’s direction. For example, most forms of corporate governance today include a Board of Directors of some kind, the members of which may be elected by the share and stakeholders, thus making corporate governance reflect the actual American government.

LLC At A Glance

 LLC At A Glance

An LLC, or a limited liability company, allows the entity of a
corporation to be formed while allowing that entity to have limited financial
and legal liability for the actions of that corporation.

 

AN LLC can include any number of shareholders or partners which
includes taxation as a corporation, but they are not technically a corporation.
Many times, a limited liability corporation is a sole proprietor company with a
single owner.

 

A single owner may form an LLC in order to protect their finances
and personal interests from the corporation. For example, if someone were to
sue the LLC and win, the individual owners’ finances could not be included in
any awards. In most cases, a judgment against an LLC could not include
collection for that judgment from the personal or individual property of any of
the individuals that make up the LLC.

 

Although a limited liability corporation helps to protect those who
make up the corporation, there are issues where legal and financial liability
is not limited to the corporate entity. For example, if individuals in that
corporation commit fraud or misrepresent the corporation, individuals and the
company could be liable.

 

For smaller companies, an LLC is a great way to form a corporation
while allowing those within the corporation to have limited financial and legal
liability. In addition, the formation of an LLC protects the company itself
from being legally and financial liable in most cases. For instance, the owner
of an LLC that goes bankrupt would not be liable to the creditors of that
corporation in most cases.