Getting Started on Limited Liability Partnership: A Guide for Businesses in Chicago
Starting a Business in Chicago: LLP Legal Considerations3 min read
Starting a business in Chicago requires a unique set of legal considerations for those who wish to form a limited liability partnership, or LLP. In this guide, we’ll explore the advantages of forming a Chicago LLP compared to other business entities, how to start a limited liability partnership (LLP), and how UpCounsel can help.
By becoming a limited liability partnership, business owners can insulate themselves from any debts or liabilities incurred by the business. The LLC structure also combines the taxation benefits of partnerships with the more robust benefits of corporate limited liability. Thus, forming an LLP is a powerful tool for business owners looking to maximize legal, tax, and financial protection.
What is a Limited Liability Partnership?
A limited liability partnership (LLP) is a business partnership structured so that the owner(s) are protected from some of the debts and legal liabilities they may incur in the course of running the business. This separation is typically in contrast to the usual case of a partnership in which, by law, all the partners are liable for any debts and obligations the venture incurs. Unlike a limited liability company (or LLC) however, an LLP is taxed like a partnership, rather than as a corporation.
Benefits of Forming a Limited Liability Partnership (LLP)
Forming an LLP can bring a number of financial and legal benefits to business owners:
Protection from personal liability for business debts: The owners can not held personally liable for the debts and obligations of the business.
Limited life: Though partnerships are considered to have an unlimited life, an LLP has a limited life which lasts as long as it is operated according to the provisions of state law. After a certain amount of time, the LLC will be dissolved and all assets liquidated.
Flexible taxation: Owners can opt for either pass-through taxation or corporate taxation, depending on their convenience.
Ease of formation and operation: LLCs are relatively easy to form and operate, compared to corporations.
Overall, forming an LLP helps business owners protect their personal assets from the risks of doing business, while providing them with the flexibility to take advantage of both pass-through and corporate taxation. For businesses in Chicago, however, there are additional considerations that must be taken into account when forming an LLP.
How to Start a Limited Liability Partnership in Chicago
Starting a limited liability partnership in Chicago involves several steps that must be carried out prior to the business commencing its operations. The first step is to select a name for the business and make sure that the name is available for use in the state of Illinois. Once the name is approved, the next step is to prepare and file the Articles of Organization. This document, also known as the “ubiquitous form” must contain the name and address of the business, the purpose of the business, and the names of the managing partners. Once issued, the original Articles of Organization must be filed with the Secretary of State.
Once the Articles of Organization are filed, the business must prepare an Operating Agreement. This document should include the types of activities the partnership will be engaged in, how the profits and losses will be split between the partners, and any other relevant information regarding the operations of the business. Once this agreement is prepared, the business must obtain a federal Employer Identification Number (EIN) from the IRS, and register the partnership with the State network of businesses.
Lastly, the business must obtain any necessary local, state, and federal licenses and permits. Depending on the type of business, this may include occupational, zoning, environmental, or other permits. It may also include registering the business with the local tax authority, as well as registering for unemployment insurance, worker’s compensation, and other mandatory benefits.
Where Can I Get Started on Forming a LLP in Chicago?
No matter where you are based in the United States, it is essential to partner with an experienced attorney who understands local regulations when formulating a LLP. With UpCounsel, business owners can connect with experienced lawyers who have expertise in setting up and managing all types of businesses, including limited liability partnerships. UpCounsel’s network of experienced attorneys encompasses a variety of specializations, such as employment law, intellectual property law, tax law, business compliance, and more.
From small businesses to the Fortune 1000, UpCounsel’s community of experienced lawyers provides quality legal services on demand. With UpCounsel’s attorneys in your corner, owners can be sure that their businesses are compliant with state and federal law.