What are the advantages/disadvantages of an LLC versus a LLP? Explain!

Expert Solution

Advantages of LLP versus LLC:

In LLP Separate legal entity exists where as in LLC It limits liability for managers and members.
LLP have No owner/manager distinction.in LLC Superior protection via the charging order
LLP haveFlexible agreement LLC have Flexible management.
Fewer compliance requiremet in LLP, Flow-through taxation IS required in LLC
Limited liability PREVAILS IN LLP, his is a premier vehicle for holding appreciating assets, such as real estate, stock portfolios, and intellectual property. IN LLC

Disadvantages of LLP versus LLC:

Inability to raise VC funding in LLP, Some states, including California, charge extra fees for operating an LLC.
inequallity of partners regarding rights in LLP, Transferability restrictions In LLC.
Greater penalties can be seen in LLP, Single Member LLCs face reduced asset protection. Many states do not honor asset protection for LLCs with a single owner in LLC.

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ekkarill92 answered 1 year ago

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