How Do I Set Up a Limited Liability Partnership?

by Owen E. Richason IV

A Limited Liability Partnership, or LLP, is a type of legal business structure that protects each partner from the debts and liabilities--differing from a general partnership in which each member is responsible for the obligations and debts of the business. LLP&#039;s also provide protection from another member&#039;s negligence--for this reason, it is a preferring structure for professional practices, such as law firms, consulting firms and medical practices. One disadvantage of forming an LLP is that some states restrict which types of businesses can form an LLP.

1. Chose a name for your LLP. Because an LLP is a professional business practice, you may not use a fictitious name and the name must include the words "Limited Liability Partnership" or may be abbreviated "LLP." For instance, you cannot set up and LLP that is named "Russell, Bob and Joe&#039;s Consulting Practice" but you may form a consulting practice by naming it "Dalrimple, Kasem, and Bhatt, LLP".

2. Visit the Secretary of State or Division of Corporation&#039;s website. You must determine if you are able to register and/or do business as a Limited Liability Partnership in that state. Some states only allow a Limited Liability Partnership to be formed by professional organizations or by certain professional practices. Texas was the first state to allow LLP formations in 1991 but as of 2010, about 10 states do not allow LLPs and four states (Nevada, Oregon, New York, and California) only allow professionals to form an LLP, such as but not limited to accountants, consultants, attorneys and architects.

3. Draft your Limited Liability Partnership agreement. Your Limited Liability Partnership agreement is much like a Limited Liability Company&#039;s Articles of Organization, in that it defines each member&#039;s role and responsibilities in the partnership. But in your Limited Liability Partnership&#039;s agreement, you must detail each member&#039;s assets and that these assets may not be used to pay the debts of another member and what liability protections each member is extended in the instance another member commits a negligent or wrongful act. List each member&#039;s obligation to the normal debts incurred during the LLP&#039;s operation.

4. Apply for a federal Employer Identification Number and open a bank account for the LLP. Go to the Internal Revenue Service&#039;s website and navigate to to apply for an EIN/TIN. Fill out the Inrernal Revenue Service EIN application and submit it electronically. You will receive your EIN after the application has been submitted and processed. Take the EIN and go with your partner members to a local bank and open a bank account. Each member will need a driver&#039;s license, Social Security Number, home address, address of the LLP and the EIN.

5. Register your LLP with the state. Go to the Secretary of State or Division of Corporation&#039;s website and navigate to file or register with the state. You&#039;ll have to provide the state with your federal EIN, your LLP&#039;s business address, each member&#039;s full name and contact information, and name one member or a third party the LLP&#039;s registered agent. A registered agent is the person responsible for receiving legal documents, so most businesses name their attorney as their registered agent. Filing fees for state registration of your LLP will vary from about $50 to $100.


  • According to Dunn & Bradstreet's, members of an LLP may lose their liability protection if they are involved in daily operation of the company.

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