An LLC, or a limited liability corporation, is slightly
different than an LLP, or a limited liability partnership. First, an LLC can be
formed by just on single individual as a sole proprietor, whereas a LLP must
include more than one person.
In both cases, individual owners of a LLP and a LLC have limited
financial and legal liability on issues that pertain to the company. However,
in some jurisdictions, each member of the LLP may have differing levels of
liability, both financially and legally, depending on their percentage of
ownership in the company. However, neither partner is liable for the actions of
any other member of the LLP, regardless of how and when they took those actions.
For example, if one partner were to commit an act of fraud in the name of the
company, the other partner would not be liable for the action in most
jurisdictions, unless they were aware of the act.
Some jurisdictions require that at least one partner have
unlimited liability or be responsible for the actions of each employee and the
company as an entity. That person could then be held legally and financially
responsible for any action by an employee or the company in daily business
transactions. In fact, that person could be forced to pay all creditors if the
company were to go bankrupt.
LLPs are not corporations and are subject to different taxation
than an LLC. In addition, the amount of liability varies between the two, as do
the operations and structures.