FORM A LIMITED LIABILITY LIMITED PARTNERSHIP
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|OUR GOAL—YOUR Complete Satisfaction and UnderstandingOur goal is to provide each of our clients with as much information as possible about starting a Limited Liability Limited Partnership. As you will see as you review the following material, there is a lot of information to digest and consider. Many legal aspects may be complex and confusing. We want you to know we are available to speak with you about any legal aspects of the formation of your Limited Liability Limited Partnership at your convenience either over the telephone or in person at the Spiegel and Utrera, P.A., office nearest you.
What's a Limited Liability Limited Partnership?
A partnership is a syndicate, group, pool, joint venture, or other unincorporated organization of two or more individuals or entities through which any business, financial operation, or venture is carried on, in which the partners share in the profits and the losses. The partnership is an entity separate from its partners. There are different types of partnerships:
- General Partnerships;
- Limited Partnerships; and
- Limited Liability Limited Partnerships;
A Limited Liability Limited Partnership consists of a general partner that manages the day-to-day operations of the business and limited partners that are investors in the Limited Liability Limited Partnership. The General Partner manages the day-to-day operations of the Limited Partnership, including and not limited to maintaining the business and financial records of the Limited Partnership.
Because of the General Partner’s potential exposure to liability, we recommend that the General Partner be an entity with limited liability itself, such as a Limited Liability Partnership, Limited Liability Company, or Corporation.
Typically, the individuals that are the general partners are different than the individuals that are the limited partners, but they need not be mutually exclusive.
A Limited Liability Limited Partnership permits passive investors to invest capital and share in the profits and losses of a partnership venture without being liable for more than their capital contribution. The General Partner and the Limited Partners make a Capital Contribution in exchange for a General or Limited Partnership Interest. Capital Contributions can be made up of contributed cash, property (any contribution of property must include a description of the property), promissory note or services rendered. Capital contributions can also consist of other obligations to be contributed by Limited Partners(s) in the future, cash, property (any contribution of property must include a description of the property) and services to be performed. Typically, the General Partner’s Capital Contribution may be a nominal amount, such as one percent (1%) of the total Capital Contribution. Also, the General Partner’s Capital Contribution may consist of future services.
A strong feature of the limited liability limited partnership is that obligations of the limited liability limited partnership, whether arising in contract, tort, or otherwise, are solely partnership obligations so that none of the partners are personally liable. The only reason for the use of the mere limited partnership form, rather than limited liability limited partnership, is when a limited partnership is required by lenders or other creditors. Understandably, because of liability protection, the limited liability limited partnership form of partnership is preferred over the other types of limited partnerships
A Limited Liability Limited Partnership has flow-through tax treatment under Subchapter K of the Internal Revenue Code and therefore a Limited Liability Limited Partnership is not subject to direct taxation. Instead, the partners must report and assume liability for their share of the Limited Liability Limited Partnership's gain or loss. Avoiding the entity level tax ensures that income flowing into a Limited Liability Limited Partnership is taxed only once.
The limited partner generally is not liable for the general obligations of a Limited Liability Limited Partnership. The Limited Liability Limited Partnership statutes permit limited partners to take many common actions without being deemed to have participated in the control of the Limited Liability Limited Partnership business, however, estate planners recommend avoiding giving limited partners more active management and control because of the possibility of adverse transfer tax consequences.
We recommend you have a Limited Liability Limited Partnership agreement describing the governance of your Limited Liability Limited Partnership, including the identities of the general and limited partners, responsibilities of the general partner, amount of capital contributions, distribution of profits and allocation of losses, Limited Liability Limited Partnership meetings, admittance and withdrawal of partners and winding up the Limited Liability Limited Partnership. In the absence of a Limited Liability Limited Partnership agreement, state statutes will govern.
In order to process your Limited Liability Limited Partnership, you will need a Limited Liability Limited Partnership Agreement prepared by our Firm or, if you already have a Limited Liability Limited Partnership Agreement, you will need to furnish our Firm an opinion letter from qualified independent legal counsel representing the proposed Limited Liability Limited Partnership stating counsel has reviewed the Limited Liability Limited Partnership Agreement and such Agreement is fully compliant with Florida law and represents the business entity contemplated by the parties.
We will form your Limited Liability Limited Partnership under the personal direction of a qualified attorney who makes certain that all requirements are met.
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