Difference Between LLC and LLP
Are you someone who’s making plans to erect a strong firm you have control of? If that’s the case, you have to look into so many aspects to look out for in this world. One of the main aspects to remember about is choosing between LLC and LLP. If you are confused between the two, you must start by learning the difference between LLP and LLC.
Both of these types of firms have a great number of uniqueness. LLC and LLP differences are easy to understand if you are an economist. However, for those of us who find organizing their own corporation a complete new experience, understanding the difference between LLC and LLP can be a tricky business.
For all those aspiring businessman/woman who have trouble discerning the difference between an LLP and LLC, this article can help in finding all the answers for the question – what’s the difference between LLC and LLP.
Definition of LLC
This type of structure is also called as Limited Liability Company. If you and your friend want to build your own company, then getting your enterprise an LLC tag is a wise thing to do. This is a kind of corporation owned by one or more members.
There are two kinds in this – single-member LLC and multi-member LLC. This is the kind of freedom you get when you go for this type of organization. Another good reason to choose this is that your personal assets will not be used against you when the creditors are trying to recover the loss.
While you are trying to declare all the loss and profit that you have borne, you do it individually. For your joy, tax is only charged once to all the profit you have gained. If one among all the members leave, you can either decide to close the set-up. You can even have a deep discussion with other members who work with you, and decide to continue with the firm.
Definition of LLP
This type of structure is also commonly known as Limited Liability Partnership. Here the partners build the venture from the roots and above. And when we talk about this kind of an establishment, generally the partners are not completely liable. It is limited.
Every jurisdiction calls a different name to this type of commerce. You can find partnered set-ups in countries like China, Kazakhstan, the UK, and none other than the tourist hub – Singapore.
In case your partner does something wrong, you cannot be stood liable for that act. You can never start a business with just one partner. It has to be more than one. The partners get to vote when they decide to make any changes to their establishment. The voting rights are given based on how much contribution they make to build the said establishment.
LLC vs LLP Comparison Table
Don’t let the question – what is the difference between an LLC and an LLP?, trouble you any further. Read through this table and learn everything you need.
|Basis of Comparison||LLC||LLP|
|Definition||Owned by a sole member or more than a member||Owned by partners|
|Liability||Limited to the amount that the member has not paid for the share they hold||It is limited only to what the partner that contributed for the organization|
|No. Of member||One to as many as you want||Has to be more than one|
|Suffix||LLC at the end of the name||LLP is added at the end|
|Countries that follow||Japan, USA, Brazil, UAE, Poland||Canada, Singapore|
|Life||The business dissolves when member leaves the company or dies||When the partner dies or leaves the company behind, it goes to the successor|
Conclusion of the Main Difference Between LLC vs LLP
In many ways, both the type of structures have many things that are the same. They both are mainly meant to shield anything and everything that the partners of a set-up or in other cases, the members own. In other words, both have liabilities that are quite limited.
When we discuss something like the difference in LLC and LLP, you will see that there is not one or two. For one, the unit is overlooked by members in case of LLC while it’s counterpart is looked after the partners. In case of the former, to form it, single or more members can totally involve themselves. But when we look at the latter, only two or more partners can form an organization.
So when someone asks you the question – what is the difference between LLC and LLP, make sure to tell them all the above.