Legal Question in Business Law in Alabama

What is an LLC? It is a limited liability company. The entity is touted as a great choice for small businesses in that it provides the lawsuit and debt protection found with a corporation, but without the administrative requirements of that entity. From a tax perspective, it is also favored in that it can be taxed as a partnership, which overcomes the double taxation issue that can arise with corporations. It should be noted that single owner LLCs face other tax issues that are beyond the scope of this article.

The LLP is yet another business entity. It is an offshoot of the popular LP, which stands for limited partnership. The LLP adds another �L� and stands for limited liability partnership. It is an entity that is favored by groups of professionals who prefer to work together. They do this by forming an LLP for their practice area. They may be lawyers, architects, or accountants.

The LLP is unique because it allows each limited partner to isolate their exposure to a negligence claim. Put in simple terms, they are only liable for their own negligence and those they control. If three lawyers form an LLP and one commits malpractice, the other two cannot be held liable for any judgment. If I am one of the lawyers and my paralegal makes a negligent mistake, then I can be held responsible although the other two lawyers cannot.

So basically it just depends on your needs and your type of business. The tax issues will almost be identical, and on the protection aspect it just depends on what you wish to protect against. You should definitely contact an attorney to help you. Please feel free to contact me should you need further information or assistance.