Moving Beyond the General Partnership to a More Structured Form
In Alabama, general partnerships have historically been the most popular way of forming a business with multiple owners. They do not require any filings or articles of organization, and can exist on the informal basis of a handshake. However, general partners are jointly and severally liable for any and all debts of the partnership, and dissolving a partnership or firing an unsatisfactory partner can often be a time-consuming and costly undertaking. The limited liability partnership (LLP) allows for a partnership business form with similar protections to the LLC. In an LLP, one partner will not be held responsible or liable for another partner’s negligence or misconduct. Unlike a “limited partnership,” the LLP allows owning partners to take an active role in managing the organization, even while being shielded from personal liability.
Like an LLC, an LLP can be formed by registering with the secretary of state’s office. A general partnership can register to become an LLP, thereby limiting their liability by operation of the LLP statute. This is a good opportunity for general partnerships, since changing organizational structures is often a much more complicated process. LLPs provide an important tool for partnerships, combining elements of partnership law and corporate law to provide limited liability in this context. The Houston County probate attorneys of Parkman White, LLP have years of experience in dealing with LLPs, and we can help you create an entity that is customized to meet your specific needs. Call our Dothan legal team today at 334-792-1900, or email us, whether you live in Ozark, Troy, Webb, Pinckard, or any area near Dothan to discuss the pros and cons of the formation of an Alabama LLP.