One suffix you surely recognize—even if you don’t know exactly what it means—is LLP: Limited Liability Partnership.

Unlike in a General Partnership, LLPs are separate legal entities and therefore the assets of individual partners are protected in the event that the company becomes insolvent; each partner is responsible only for the amount specified in his/her Partnership Agreement.

The security of a Limited Liability Partnership comes at a price; accounts information and auditors’ reports must be filed with the Registrar of Companies where they become public record.  Also, all personal contributions to the LLP by partners become property of the company itself.  This means as a partner in an LLP, you may not be able to get any of your investments back should you so desire.

The fact that an LLP is a separate legal entity can be an advantage, however.  This kind of company may own property, sue, and be sued; this protects its partners from both personal legal and financial liability.

Additionally, despite its status as a separate entity, an LLP retains most of the tax advantages of a General Partnership.  Local tax rules vary by state, but the national Internal Revenue Service is friendly to LLPs.
Upgrading a General Partnership to LLP status is easy.  Simply submit an application to register as a limited liability partnership with the appropriate state agency.  In addition to partners’ names and a business address, some states may require a business description, insurance information, and written acknowledgement that LLP status may expire.