Limited Liability Partnership (LLP)
QUICK ANSWER
A Limited Liability Partnership is a business structure in which two or more partners manage and operate a business while each partner's personal liability is limited to their own actions and contributions. Unlike a general partnership where all partners share unlimited liability, an LLP protects each partner's personal assets from the business debts and misconduct of the other partners.
In depth
LLPs combine the operational flexibility of a partnership with a meaningful degree of personal liability protection. The partnership itself is treated as a separate legal entity, meaning it can enter into contracts, own assets, and take on debt in its own name. Partners share in the profits and losses of the business according to the terms of their partnership agreement, which also governs decision-making authority, capital contributions, and the process for admitting or removing partners. In most jurisdictions, LLPs also benefit from pass-through taxation, meaning profits are taxed at the individual partner level rather than at the entity level, avoiding the double taxation that applies to corporations.