A couple of weeks ago, a post on this blog began a discussion on the six different types of business entities that can be formed in California. That post provided the readers with a brief overview of a Corporation, a Limited Liability Company and a Sole Proprietorship. Moving on, this post will provide readers in and around Palos Verdes Estates a brief idea regarding the other three types of business entities, namely, general Partnership, Limited Partnership and Limited Liability Partnership.
A General Partnership, or GP, is a business entity that has at least two individuals who are in business for a profit. In this type of partnership, the profits are taxed as personal income and all partners are jointly and severally liable for all the obligations of the partnership, unless where it is provided otherwise by law.
A Limited Partnership, or LP, in California, is somewhat different from a GP. In this case, some partners may have limited liability. There has to be a general partner who will act as the controlling partner of the LP and there also has to be a limited partner whose liability is limited to the stake that he or she holds in the business. The general partners, on the other hand have unlimited liability for debts and obligations.
A Limited Liability Partnership, or LLP, is the sixth type of business entity that can be formed in California. An LLP usually engages in the practice of law, accountancy, engineering, land surveying and architecture. In addition, partnerships, which provide these services to a California-based legal or accountancy LLP or a foreign-based LLP. Per law, LLPs in California are required to have a certain level of insurance.
This blog post, and the one published earlier, are meant to provide prospective business owners with an idea based on which they can choose an entity type for a new business. However, starting a business involves a plethora of other tasks and obligations. To make sure that everything is in order for a smooth-functioning business, readers may choose to retain a business law attorney who has experience in helping people set up their business in the Golden State.