Business law changes frequently, sometimes adding more business structures to the existing roster of types that you can form in the state of Oklahoma. A recent addition is the limited liability limited partnership.
An LLLP provides the owners of the company with limited liability protections while allowing for general and limited business partners.
The partnership structure of an LLLP
In an LLLP, general partners manage daily business operations while limited partners act as silent investors with little say in running the company. Both types of partners gain legal protections from business debts and lawsuits. Their personal assets remain shielded if the business fails or faces legal issues. This differs from a standard limited partnership where at least one general partner retains unlimited liability.
Forming an LLLP also protects a general partner from the misconduct of another. If one general partner engages in negligent or fraudulent activity, the other general partners avoid personal liability. This unique liability shield provides a major advantage over other partnership structures.
Liability compared to other companies
LLLPs provider greater liability coverage than a limited liability partnership but not as much as an LLC or an S-corporation. LLLPs also must register in states that recognize them. Oklahoma allows businesses to form LLLPs, but some states like California prohibit them. This makes operating an LLLP a more complicated matter if you wish to operate beyond state lines.
People who benefit from LLLPs
Real estate companies commonly create LLLPs. Groups of investors often use LLLPs when jointly acquiring commercial buildings or housing developments. This lets investors tap into profits without assuming personal liability for debts.
LLLPs also work for asset management firms, car dealerships, media companies and scientific research labs. Any industry concerned about limiting legal and financial risks of general partners could potentially benefit.
While an LLLP limits risks for general partners in Oklahoma businesses, it does not eliminate risks entirely. Make sure the structure aligns with your industry and business goals. With the right preparations, an LLLP could provide your company with helpful liability protections.