Question
In: Economics
What is one of the differences between an LLC and an LLP? A. LLPs are creatures...
What is one of the differences between an LLC and an LLP?
A. LLPs are creatures of federal law, whereas LLCs are creatures of state law.
B. LLCs are permitted to do business in other states, whereas LLPs are not.
C. Members of an LLC are liable only up to their capital contributions. Partners in an LLP face unlimited liability.
D. Accountants, lawyers, and doctors must use the LLP form of partnership, not an LLC.
E. Only LLCs enjoy the flow-through tax benefit.
Solutions
Expert Solution
Option D
Accountants, lawers and doctors must use LLP form of partnership, not an LLC.
Generally speaking, LLCs can be formed by any business, persons, or person, while LLPs may be restricted to licensed professionals, such as attorneys, doctors, engineers, architects, and accountants. For example, in California and Nevada, licensed professionals can form an LLP, but cannot form an LLC. This is why a large law firm will opt to form an LLP, as they can operate as an LLP in every state, but would not be able to operate as an LLC in every state.
Rahul Sunny answered 1 year agoRelated Solutions
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