Most people who start a business usually consider whether they should incorporate as a company, but not whether a limited liability partnership (LLP) might be a better alternative. The advantages are disadvantages of structuring your business as an LLP as similar to those of structuring as a company.
Why structure as a limited liability business?
The primary advantage is in the name – limited liability: the owners of the company have their liability ‘capped’ to their investment in the partnership in the event that the business is sued or becomes insolvent.
In a traditional partnership, unless a partnership agreement states otherwise, all partners are able to conduct partnership business, and each is liable for the actions of every other. The implications are as follows: any partner can enter into a contract on behalf of the partnership without the consent of the other partners, regardless of what the contract is. For example, a partner may take out a business loan without telling other partners. If that contract…Continue Reading