A Limited Liability Partnership (LLP) is a hybrid form of business entity that combines the benefits of both partnerships and corporations. An LLP is created under partnership law and has some characteristics of a corporation. It can have members who are not partners but rather shareholders. Partners may contribute capital and carry on the business in exchange for profits and losses.
In addition, they may receive distributions from the company in return for their contributions. If any partner dies, his/her share goes to the remaining partners. A partner’s interest in the firm is protected through limited liability protection.
This type of business organization is commonly used by small businesses since it provides them with limited liability protection without having to pay the high costs associated with incorporation.