Legal Question in Tax Law in Colorado

Re: LLP v. LLC - tax consequences

There are no significant differences tax wise between a limited liability partnership and a limited liability company, both are considered partnership or pass-through entities. Meaning the entity itself does not pay income tax. Rather profits and losses pass through to partners. The difference is in corporate governance. An LLP typically requires a general partner. Many people use an LLC or corporation for the general partner in order to continue to have limited liability. The deciding difference is how you want to govern the entity, and how many partners or members you have.