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The difference between an LLC and an LLP

Setting up your business requires decisions and is important to know the difference between an LLC and an LLP to know which is right for you.

If you’re starting a business, you’re probably looking into an LLC and an LLP. But what’s the difference? Here are the basics:

Company Vs. Partnership.

The difference between an LLC and LLP is that the former is a limited liability company, and the latter is a limited liability partnership.

LLCs and LLPs are both forms of business ownership that protect their owners from personal liability for debts or lawsuits involving the company. While many people use these terms interchangeably, they are quite different types of businesses:

● Limited Liability Company (LLC): A limited liability company, or LLC, is an entity that allows its members to be protected from personal liability by shareholders in corporations or partners in partnerships. In addition to this protection, general partners of the LLC can also limit their responsibility through specific actions they take for their company (such as signing contracts).

● Limited Liability Partnership (LLP): You might have heard about LLPs, often called “limited partnerships.” This is set up similarly to a regular partnership. The difference is that each partner is only liable for their negligence and not the other partner’s mistakes. 

LLC Benefits


An LLC is a form of business ownership, just like a corporation or a partnership. But unlike those other entities, an LLC gives you limited liability—meaning you can’t be held personally responsible for your company’s debts. And because it’s treated as a pass-through entity for tax purposes, you don’t have to pay corporate taxes; your profits are reported on your income tax returns (and you might even get some deductions!). However, you tend to have less control over investments and how the company is run.

LLP Benefits

An LLP is set up like a regular partnership, so the partners have to run the business together. The great thing about this is if your partner is sued or makes a mistake, you as a partner aren’t liable for it. But if you make a mistake, you are responsible for it, and your partner is not. So you don’t have a fallback zone like an LLC does. But you do have more control over the business in general. 

Limited liability partnerships (LLPs) are typically used by professionals such as attorneys, accountants, and architects.

LLP stands for limited liability partnership, a business entity that has been around for more than a century. Recently, its popularity has increased due to its tax advantages over limited liability companies (LLCs).

It’s essential to understand how these work before starting a business.

LLC and LLP are different types of business structures.

LLC is more flexible than an LLP. LLCs do not need to be registered with the state to operate, and they allow for a higher level of privacy because their owners are not publicly disclosed. However, LLCs offer fewer tax benefits than LLPs or corporations since they don’t receive pass-through taxation status as partnerships and corporations do.


In the end, deciding which form of business ownership is best for you and your enterprise can be tricky. 

You should take some time to think about what makes the most sense from both a tax and liability perspective when deciding if an LLC or LLP is suitable for you. We hope this post helped answer some questions about how these work so that you feel confident making that decision.

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