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What Is LLLP Meaning
You’re looking to sign a contract with a business partner and you see a company name ending in LLLP…
What does LLLP mean in a company name, you wonder?
LLLP is short for “Limited Liability Limited Partnership” which is a type of partnership having hybrid characteristics of other types of business entities.
A limited liability limited partnership is considered a form of limited partnership where both the general and limited partners benefit from limited personal liability.
In other words, business creditors cannot exercise any personal recourse against the general and limited partners to recover a business debt or hold them liable for partnership liabilities.
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Forming an LLLP
An LLLP is a relatively new type of business entity in the United States.
Some states have statutes allowing you to form an LLLP whereas others do not have enabling statutes.
The states where you have LLLP enabling statutes are:
- Alabama
- Alaska
- Arizona
- Arkansas
- Colorado
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Indiana
- Iowa
- Kentucky
- Maryland
- Minnesota
- Missouri
- Montana
- Nevada
- New Mexico
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Pennsylvania
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- Washington
- Wyoming
- US Virgin Islands
California does not have enabling statutes for an LLLP but recognizes foreign LLLPs.
Illinois does not have enabling statutes but allows the formation of an LLLP under the Revised Uniform Partnership Act.
LLLP Definition
What does “LLLP” mean in business?
In essence, “LLLP” is the acronym for “Limited Liability Limited Partnership”.
A Limited Liability Limited Partnership is a type of business entity where you have both general and limited partners.
LLLP is a relatively newer type of business entity and it is not as widely used as limited liability partnerships (LLPs) or other types of partnerships.
In fact, most states in the United States still do not recognize an LLLP as a form of partnership.
Common Uses of LLLP
Since LLLPs are relatively new business structures in the United States, it has yet to achieve widespread use.
However, LLLPs have gained popularity in the real estate industry
In real estate, LLLPs are used by real estate investors to get together and invest in a real estate project, like purchasing an office building, an apartment building, building a hotel, building condos, and so on.
Having an LLLP gives assurance to the real estate investors that they are personally shielded from the partnership debt and liabilities in case something goes wrong.
LLLPs are also used in other sectors such as broadcasting, publishing firms, scientific research firms, and asset management companies.
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Advantages of LLLP
What are the main benefits of an LLLP?
The main advantage of operating a business as an LLLP is that both the general partners and limited partners benefit from limited liability.
In essence, an LLLP can do everything that a limited partnership (LP) can do.
The general partners of an LLLP are shielded by the LLLP structure from liability if the partnership is sued or is held liable.
With an LLLP structure, the general partners will no longer need to consider forming a limited liability entity to protect themselves personally.
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Disadvantages of LLLP
What are the main drawbacks of an LLLP?
The main drawback of forming an LLLP is that it is a newer type of partnership structure that is not recognized by all the states in the US.
Some states allow the formation of LLLP as business entities while other states do not.
Another important drawback is that there are not enough case laws in the United States clearly establishing the limited liability of the general and limited partners and how the LLLP can shield the business owners.
From a legal perspective, the LLLP business structure remains to be tested in courts.
LLLP vs LP
What is the difference between LLLP and LP?
An LLLP is a limited liability limited partnership whereas an LP is a limited partnership.
A limited liability limited partnership is a business structure where you have at least one or more general partners and at least one or more limited partners.
Within the LLLP structure, both the general partners and limited partners benefit from limited personal liability where their personal assets are shielded from business creditors.
An LP is a limited partnership is a type of partnership where you have at least one or more general partners and one or more limited partners.
However, the general partners in an LP have unlimited liability for the partnership debt and liability.
Limited partners in an LP have their liability limited to their investment in the partnership.
The general partners in an LP have full management of the partnership whereas limited partners do not participate in the partnership management.
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LLLP Examples
Many partnerships are organized as limited liability partnerships (or LLPs).
However, you also have some partnerships that are formed as limited liability limited partnerships (or LLLPs).
In the United States, only some states have enabling statutes where you can form an LLLP.
As a result, the use of LLLPs as a business structure is still not as widespread as LLPs.
Here are some LLLP examples:
- Real estate investment firm
- Laboratory research firm
- Wealth management firm
- Broadcasting firm
- Car dealerships
- Scientific firms
- Engineering firms
Takeaways
So there you have it folks!
What is an LLLP?
An LLLP is short for Limited Liability Limited Partnership which is a specific type of business entity derived from limited partnerships.
Just like in a limited partnership, you have general partners and limited partners.
However, the main difference is that in the LLLP, the general partners also benefit from limited liability just like the limited partners.
Now that you know what is the meaning of LLLP and how it works, good luck with your research!
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