Some Pennsylvania entrepreneurs have special concerns about exposing themselves to liability when starting a new business. If you and a business partner are exploring a way to come together to form a business while limiting your liability exposure, a limited liability partnership is one option to consider. Even so, LLPs are not for every partnership, so some factors should be taken into account while exploring this option.
Chron.com explains that certain businesses are more at risk for liability than others, so if you are considering an LLP, you should think about whether you will be likely to face litigation because of the kind of profession you practice. Doctors, for example, may encounter litigation from patients who sue on the basis of malpractice. Forming an LLP can help offer some protection for one partner in the event the other partner ends up harming a customer, client or patient.
Limited liability partnerships can also work if one of the partners has no desire to participate in management decisions. Some people want to invest in a business but do not want to expose themselves to liability claims or they do not possess the managerial experience to run a company. By forming an LLP, the non-managerial partner can be a silent partner, leaving the other partner to actually run the company.
LLPs are also an option if the partners involved have no long term plans to stay in business. Some partnerships are only intended for a brief period of time, perhaps to handle a specific project or a short series of projects. An LLP can help limit the possibility of litigation that could delay the partners’ efforts to dissolve the business when they no longer have a desire to continue on.
People may also form an LLP if they are not deterred by a complex business formation. The allure of general partnerships is that they are easier to set up. An LLP, on the other hand, requires more formal setup, including registering the business as an LLP with the state’s secretary of state office or the state’s designated business registration agency. Still, people who are unfamiliar with LLP formation can seek out professional legal counsel to guide them through the process.
The information in this article is not intended as legal advice. Since LLPs can take many forms, you should only view this article for its educational content.