LLC stands for Limited Liability Company, and LLP stands for Limited Liability Partnership. The owners of Limited Liability Company are called “members.” LLC can have as many members as possible. Corporations can also be members of LLC as well. Members of this company govern the affairs or hire a professional to govern the affairs on the business.
According to IRS, LLCs do not have to pay taxes as it is not considered as a tax filling entity. Profit and loss of the company are passed down to the tax returns of each member. LLP has many similarities with LLC. However, there are notable differences between them. Limited Liability Partnership cannot have corporations as owners. LLPs usually have managing partners that bear the liability cost for actions taken by the partnership. I hope you find this information helpful.
If you are not familiar with LLC and LLP, these are known to be business types that people can have depending on what they need. An LLC will usually be composed of members while in LLP, they will be called partners. Take note that only individuals can become members of the LLC. If the LLC will have more than one owner, this means that they would be partnering for taxes.
LLP is known to be only available to certain types of owners. Not everyone will be able to own an LLP. People will have a better chance of owning an LLC. If you own a small business, an LLC is better to have as compared to the LLP.
LLC is an abbreviation for Limited Liability Company. LLP is an abbreviation for Limited Liability Partnership. LLC’s are more common in the United States, while LLP’s are more common in the United Kingdom. LLC’S are appropriate for smaller businesses with few shareholders, while LLP’s are appropriate for professional companies.
Management level for LLC is only members and managing members of the company. LLP is decentralized. The number of members needed to set up LLC's is one. The number of members required to set up LLP's is two. LLC is single taxation with profit or losses passed directly to members. LLP is individual taxation.