Limited Liability Corporation and Limited Liability Partnership Paper Essay

Limited Liability Corporation and Limited Liability Partnership Paper - Essay Example But, LLPs still impose certain obligations from each of the partner as a way of maintaining standards of accountability. LLPs differ from other general partnerships in one particular aspect, namely, that each partner is only liable to his/her own debts and obligations and are not required to share the burden of their partners’ debts and obligations. In the United States, there are comprehensive legislations that govern the conception and formation of LLPs. This form of partnership is more suitable to companies offering professional services such as law firms, an accountancy firms, etc. As a matter of fact, a few states within the United States allow only certain professional classes to form LLPs. The primary legislative document that deals with partnership firms is the Uniform Partnership Act, which provides detailed guidelines. Further, many states offer liability protection only against select negligence claims, which implies that for, say, contract claims, a partner can be made liable. LLPs are similar to other partnership arrangements in that the profits accrued are divided evenly among all the members of the partnership. This is essentially to facilitate taxation and to avoid double taxation, which can dent an individual member’s profits. Some state legislation adds more conditions for limited liability. For example, â€Å"Many states provide protection only against tort claims and do not extend protection to a partners own negligence or incompetence or to the partners involvement in supervising wrongful conduct. Other states provide broad protection, including protection against contractual claims brought by the partnerships creditors. It further provided, however, that a partner was personally liable to the partnership and copartners for any breach of duty, and also allowed a creditor or other claimant to pierce the limited liability shield of a partner in