Here at the Law Offices of Levi Williams, P.A., we’ve helped countless Fort Lauderdale clients select the right business entity under which to form their companies. If you and a friend or colleague are looking to form a professional business partnership, you may be wondering which is best: a general partnership or an LLP. The answer to that depends largely on the nature of your business.
With a general partnership, you and whatever partners that you have are allowed equal rights in managing the company. This is true regardless of each partner’s shareholder stake. This may be the way that you and your partners want to go if you want to ensure an equitable distribution of authority. Some partners may only agree to participate in your venture if they have equal say in the development of your business plan and in managing your day-to-day operations.
However, with equal authority comes equal responsibility. If civil action is taken against a general partnership, all of the partners are held liable. A limited liability partnership, on the other hand, offers you and others within your company’s ownership structure protection. Specifically, the Florida guidelines on registered limited liability partnerships clearly state that you are shielded from any recourse resulting from the actions of your partners, including:
- Unlawful activity
- Errors and omissions
This holds true even if the actions were committed by employees or agents acting under the direction of your partner.
In instances where you have the backing of investors, you may prefer to go with an LLP. This gives you management control over your company, while offering protection to your investors from liability claims.
More information on the formation of business partnerships can be found on our site.