What is a limited liability partnership and what are its features?
A limited liability partnership (LLP) is a business entity formed in Texas that offers the benefits of a partnership while also protecting its partners from personal liability. Partners in an LLP are not personally responsible for the debts and obligations of the partnership, meaning their personal assets are not at risk if the partnership is sued. An LLP is formed by filing articles of organization with the Texas Secretary of State. The LLP must have at least two partners, and each partner must make contributions such as money, property, services, or a combination of these. An LLP must also have a registered agent in Texas who is responsible for receiving service of process. The way income and losses are shared in an LLP is determined by the partners themselves. This information can be found in the partnership agreement, a document that the partners must draft, sign, and keep for their records. Partnership agreements may also include decisions governing daily business operations, such as the duties of each partner, how to admit or remove partners, and how to dissolve the partnership. Like other partnerships, an LLP is subject to certain tax and reporting requirements. Unlike other partnerships, however, LLPs are required to register with the Texas State Board of Public Accountancy. This board determines the continuing education requirements for partners in an LLP. Additionally, LLPs must file an annual report with the Texas Secretary of State.
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