GENERAL PARTNERSHIPS AND LIMITED LIABILITY PARTNERSHIPS LLPs

1
GENERAL PARTNERSHIPS AND LIMITED LIABILITY
PARTNERSHIPS (LLPs)
2
RUPA DEFINITION OF GENERAL PARTNERSHIP

• ASSOCIATION OF TWO OR MORE PERSONS TO CARRY ON AS
  COOWNERS A BUSINESS FOR PROFIT

3
Limited Liability Partnership (LLP)

• General partnership that registers under state
  law
• Must use LLP in its name
• Limited liability partners have liability shield
  
• Not subject to unlimited personal liability as in
  general partnership

4
ELEMENTS OF PARTNERSHIP

• ASSOCIATION
• Highly personal relationship financial marriage
• COOWNERS
• Partners jointly own and control the business and
  share profits and losses
• A BUSINESS FOR PROFIT
• Purpose is to engage in ongoing commercial
  enterprise

5
CREATION OF PARTNERSHIP

• Created By Agreement
• Can be express or implied
• Articles of Partnership
• Few Formal Requirements
• File fictitious partnership name
• Register as LLP limited liability partnership

6
TERMINATION

• Dissociation event (e.g., withdrawal)
• Partner ceases to be associated with partnership
  
• Followed by either
• Dissolution - liquidation (wind up) and
  termination
• Buy out and continuation of business

7
Partners Financial Rights

• Share in profits
• Profits divided equally unless agreement
  provides otherwise
• Return of capital contributions
• Repayment of personal loans to partnership
  called advances

8
Partners Management Rights

• Vote on partnership affairs
• Partners have equal say unless agreement
  provides otherwise
• Inspection rights

9
Authority of Partners as Agents

• Broad authority to engage in any transaction in
  the ordinary course of business of partnership
• Partnership agreement or action of partners may
  limit that authority but third parties must have
  knowledge of limitations

10
Duties of Partners to Partnership

• Loyalty and good faith
• Due care in the conduct of business
• Information and accounting

11
Liability of Partners

• General partnership partners have unlimited
  liability for debts of partnership
• Assets of partnership and personal assets of
  partners
• Limited liability partnership (LLP)
• Partners have a liability shield from some or all
  debts of partnership
• Assets of partnership and personal assets of the
  partners participating in torts

12
Tax Status of Partnerships

• Partnership is not a taxable entity under federal
  tax code
• Partners pay taxes on their share of partnership
  profits