What's the difference between a Limited Liability Partnership (LLP) and Limited Liability Company (LLC)?

Question

My bar exam materials thoroughly explain what an LLP is, but they say nothing about an LLC.

Answer 1

A partnership is a non-separate business entity. The partners get all profits and split all losses. In a normal partnership, all partners are involved in business decisions, all share equal liability.

A LLP allows for partners who contribute only money, but do not actually participate in the operate of the business, so their liability is limited -- as long as they stay hands-off.

An LLC is separate business entity -- unlike a partnership. And LLC also has limited liability, but the roles of each contributor are uniquely defined. It's a hybrid between a corporation and a partnership.

In an LLC, some individual members can directly participate in the management (member-managed) which exposes them to liability the same as other corporate officers or directors. Or they can farm out the managment (manager-managed), in which case the members have only the liability of corporate shareholders. An LLC is also flexible for tax purposes, either functioning flow-through like a partnership, or operating as a separate taxable entity like a corporation.

Answer 2

It is the difference between a company and a person.

In the case of a limited arraignment the liability of the arraignment is limited. If the group gets sued then they can't take a member for all that he is worth.

A corporation is a legal individual, a partner is a person, a company can be either. If you sue Exxon for something then you can take Exxon for all it's worth, but you can't touch the wealth of the executives unless you prove that they personally were to blame for the problem. If you sue the XYZ Partnership they you can take the partnership for all that they have and if that isn't enough you can go after the personal wealth of the partners themselves.

In a Limited Liability Company the liability is limited to the company as well as locked to a limited extent. In the case of a suit the owners have some protection. The amount of protection depends on the type of company. The XYZ Partnership can call itself a company, but if it is formed with a partnership agreement then it is a partnership. The Joe Blow Company could be a partnership, a sole owned company, or a corporation. It depends on the definition of company.

I only had one college law class so I am not an authority on this question. I do know what a limited liability is though and I do understand how a partner's assets can't be separated from his company, while a corporation's can. The key to your question lies in the definition of company, and in most times a company is a corporation. A corporation is for, for legal purposes, an individual with the responsibility and so the liability stops with them.

Answer 3

An LLC is merely a company, not a partnership, which an LLP is. That is the only difference, look up the terms partnership and company. The law library should have lots of Encyclopedias available to help you. .

Answer 4

Company is the same as corporation. It is a legal entity. A partnership is not a corporation. It is made up of two or more people, who are individually liable.

Answer 5

One has owners LLP and the other has CEO's LLC.