How to set up a limited liability partnership

Written by miguel cavazos
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How to set up a limited liability partnership
LLPs limit each partner's personal liability. (partnership image by Dmitri MIkitenko from Fotolia.com)

Limited liability partnerships (LLPs) limit the liability of all business partners. Limited liability means that the owners are not personally liable for the debts and obligations of the company, and a partner is not required to pay business debts or lawsuit damages with personal assets. All states require formal registration of limited liability pPartnerships.

Each state has different specific requirements for qualifying and registering limited liabiilty partnerships. Most states require registering the business name, a declaration of limited liability partnership and insurance coverage to form one of these partnerships.

Skill level:
Easy

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Instructions

  1. 1

    Register a business name with the agency or department in charge of business registration in your state, if your business name is not the first and last name of all partners. Submit the business name with the appropriate processing and handling fees. Some state departments include the department of state, department of commerce, or a county tax office.

    Name registration may require completing a form with a few business name options. Most states require that a limited liability partnership end with "Limited Liability Partnership", "LLP", "L.L.P" or "Ltd L.P".

    Submit the name registration by mail, in person, or online following the directions provided by your state's agency. The department will check the name against their database to verify it is available and meets standards for business names set by that state. Some standards may include whether the name is misleading, or too similar to other names.

  2. 2

    Register a "Declaration of Registration of Limited Liability Partnership" with the appropriate state department or local agency in your state. This declaration must contain the name of the business, type of business, location, date of starting the businesses, and contact information for all the partners.

    Other information your state may require includes titles for each partner, statement of authority for each partner or statements of liability for each partner. Register the "Declaration of Limited Liability Partnership" by submitting the forms for your state with the designated handling and processing fees.

  3. 3

    Insure your limited liability partnership. Some states have specific insurance requirements for limited liability pPartnerships. For exampled Delaware, Pennsylvania, Texas, and Virginia law requires these partnerships to have insurance or an escrow account that covers liabilities the partners were not liable for. Each state governs the insurance requirements for limited liability partnerships. Check with your state agency to get the specific requirements.

Tips and warnings

  • Verify your qualifications for LLP registration. Some states, such as California, restrict the limited liability partnership entity to associations of licensed professionals such as accountants, architects and lawyers.

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