Key Takeaways

  • A Florida LLP (limited liability partnership) protects partners from personal liability for most partnership obligations.
  • A Florida LLLP (limited liability limited partnership) is a type of limited partnership where the general partner is also shielded from liability.
  • Both entities require filing a statement of qualification with the Florida Division of Corporations and paying filing fees.
  • LLPs and LLLPs are generally taxed as pass-through entities, with profits and losses reported on partners’ individual returns.
  • LLPs are often chosen by professional practices (lawyers, accountants, architects), while LLLPs are frequently used in asset protection and estate planning.
  • Differences between LLP vs. LLC in Florida include management structure, liability protections, and flexibility in ownership.
  • Asset protection strategies often involve combining LLCs, LPs, and LLLPs to safeguard personal and family wealth.

The Florida limited liability limited partnership business structure was formed in 1999 when the legislature in Florida moved forward with CS/HB 361, which made small changes to Florida Statutes 620.8101 to make available limited liability limited partnerships (LLLP) and limited liability partnerships (LLP).

Limited Liability Partnerships

The LLP is a general association where no partners have singular accountability for the deeds of the collaboration. An LLLP is a restricted association where the common partner is not personally responsible for acts that take place in a limited partnership. Estate protection planning is important when it comes to an LLLP. In the past, attorneys would form limited collaborations with a general partner in the corporate world so that no one would reveal themselves to individual liability since they were a general partner.

An LLLP's common partner is kept safe by the law above from responsibility for acts in a limited partnership. Someone who is a common partner of a restricted liability limited collaboration exposes himself to no liability. A benefit of using an LLLP with one common partner is that this relationship saves the complexity and cost of starting and retaining a different legal person (the corporate common partner) to stay away from personal responsibility. A limited partnership that exists can be a restricted responsibility limited collaboration and take away the hardship of responsibility from the common partner.

Limited partnerships accompanied by corporate general partners can dismiss the corporate general partner, change their agreements, and replace it with a single limited partner. To become a limited liability general partnership or a limited liability limited partnership, a statement of qualification must be filed by the partnership with the State of Florida and pay a filing fee of $25.

Filing the statement of qualification does not do anything to any other parts of the existing partnership agreement. There is no reason that a partnership should not file a statement of qualification if they are concerned about the general partners' liability so that they can become a limited liability partnership.

Forming a Florida LLP

To form a Florida LLP, partners must file a statement of qualification with the Florida Department of State, Division of Corporations. The filing fee is currently $25, and annual reports must also be submitted to maintain active status. Unlike informal partnerships, Florida LLPs must clearly identify themselves as such in their name by including “Registered Limited Liability Partnership,” “Limited Liability Partnership,” or an abbreviation such as “RLLP” or “LLP.” This ensures third parties are on notice of the liability protections in place.

Florida LLPs are especially popular among licensed professionals like attorneys, accountants, and architects. These fields often involve higher exposure to negligence claims, and an LLP provides a way to shield partners from the malpractice of others in the firm, while still allowing them to be taxed as a partnership.

Florida Limited Liability Partnerships

The preferred form of limited partnership is the Florida limited liability limited partnership. Partnership obligations include ones incurred while an LLLP, no matter if in contract, error, or in other ways. No other partners are personally responsible for these obligations. This is why the LLLP form of collaboration is the favorite type of a limited partnership. An exception is when the general partner's liability qualify of a LP is needed by creditors such as lenders.

A Florida LLLP is similar to a general collaboration; although it has two different types of partners. A general partner is part of an LLP and watches over the business. The limited partner is usually a shareholder who gives capital to the business but is not involved with the management. The limited partner has no personal liability for business claims and debts as long as they have never done anything in management. The LP can be changed to a LLLP if a partner desires to protect its common partner of the present limited partnership.

Income taxation of LLP and LLLPs, considering income tax purposes, are usually regarded as common general partnerships, where all the partners are singularly paying taxes and reporting on their portion of profits every year. A descriptive partnership tax return of salary is filed by the LLLP, and every partner gets IRS Schedule K-1 (1065), deductions, partner's share of income, credits, and other similar documents from the collaboration. Every partner files the form along with their with their singular IRS 1040 tax return.

As a rule, limited partners do not have to return self-employment taxes due to not being operational in the business. The self-employment tax does not consider their part of collaboration income “earned income."

Florida LLP vs. LLC

Business owners often compare Florida LLPs and LLCs since both offer liability protection and pass-through taxation. However, there are key differences:

  • Management: An LLC may be member-managed or manager-managed, while an LLP typically requires all partners to play an active role.
  • Ownership: LLCs can have members who are individuals, corporations, or even other LLCs. LLPs generally consist of licensed professionals or individuals working within the partnership.
  • Liability Shield: Both structures limit personal liability, but in an LLP, partners remain personally liable for their own malpractice or misconduct, while LLC members are generally shielded from all company debts and liabilities.
  • Flexibility: LLCs are more flexible in terms of ownership structure and profit distribution, while LLPs are better suited for groups of professionals who want equal management rights.

For professionals in regulated industries, a Florida LLP may be the preferred option. For startups or small businesses without licensing restrictions, an LLC often provides broader flexibility and stronger liability protection.

Florida LLCs and Family Limited Partnerships Asset Protection

There are three types of Florida business organizations that have important benefits for asset protection. These are:

  • Florida limited partnership (LP)
  • Florida limited liability limited partnership (LLLP)
  • Florida limited liability company (LLC)

A limited partnership in Florida is a consensus between two partners, limited partners and general partners, to invest in an asset or do business. The partnership conditions and terms can be seen in a written limited partnership agreement.

Advantages of Florida LLLPs in Asset Protection

Florida LLLPs are especially attractive for estate planning and asset protection. Because general partners are shielded from liability, families often use an LLLP to manage investment assets or real estate while safeguarding personal wealth from creditors. Creditors who pursue claims against a limited partner are often restricted to a “charging order,” which grants only the right to distributions rather than allowing seizure of partnership property.

An LLLP can be combined with family trusts or LLCs to create a layered structure for asset preservation. For example, a family may hold real estate in an LLC, with that LLC owned by an LLLP. This combination allows for professional management of assets while limiting liability exposure and protecting the family’s long-term financial security.

Frequently Asked Questions

1. What is the main difference between a Florida LLP and LLLP?

An LLP protects partners from partnership debts but not from their own misconduct, while an LLLP shields both limited and general partners from liability.

2. Who typically forms a Florida LLP?

LLPs are commonly used by professionals such as lawyers, accountants, and architects who want liability protection from their partners’ actions.

3. How is a Florida LLP taxed?

LLPs and LLLPs are taxed as pass-through entities. Each partner reports their share of profits or losses on their personal tax return.

4. Do Florida LLPs need annual reports?

Yes, LLPs must file annual reports with the Florida Division of Corporations to remain in good standing.

5. Can an existing Florida LP convert to an LLLP?

Yes, by filing a statement of qualification, an LP can become an LLLP, extending liability protection to its general partners.

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