A Limited Liability Company is a legal entity all its own, while a partnership is owned by two or more people who share legal responsibility of the business entity. In a partnership, the business does not possess a legal identity outside of the business owners. A Limited Liability Company offers more flexibility in terms of operations and personal asset protection.
An LLC may be owned by a single person, while a partnership needs at least two members to be formed. LLCs can also possess other business entities, such as a partnership, corporation or other LLC. An LLC may also have foreign individuals and businesses as active owners, whereas a partnership cannot.
A partnership is created when two people decide to form a business together. The partners are not required to file any paperwork with or obtain any documents from the local government in order to start doing business. An LLC, however, must obtain a certificate of formation with the state where the business is organized. Additionally, the entity must be registered with each state in which it conducts business.
As its name applies, a Limited Liability Company offers limited liability protection against legal actions and business debts. With this protection, the personal possessions of the owners cannot be used to pay for any of the business’s debts. Each owner is as liable for business debts as what they invested in the company.
A partnership, on the other hand, means that the owners are each fiscally responsible for business debts, and can be held accountable for all business discretions. This means that the owners can be held personally accountable, and their personal assets used, to cover any debt, lawsuits and legal fees.
An LLC has an unlimited lifespan, even if an owner dies or one sells his or her share of the company interest. A partnership, however, ends once one partner dies or sells their ownership interest.
For more information about partnerships and LLCs you can contact GovDocFiling here.