A limited liability partnership agreement officially establishes the company and the relationship of the partners to each other and the company. Without this type of agreement, partner liability is not restricted, meaning that their personal assets could be affected by any lawsuits or claims filed against the company.
The Purpose of an Agreement
A limited liability partnership (LLP) agreement is intended to notify all individuals doing business with the partnership that they are unable to go after the partner's personal assets if they sue. Aside from a few legal exceptions, the only amount a customer can access in a lawsuit against an LLP is the amount the partners invested.
LLP Agreement Contents
An LLP agreement must identify all company partners by name, provide their addresses, state the company's name and address, and clearly identify that the company is an LLP. Without this last statement, an LLP is not established. Furthermore, the agreement should state the partners' titles, particularly if they participate in the business's daily operations. An LLP must have at least two members.
The agreement must also set forth the rights and duties of each partner. This requirement exists so that it is firmly established who is responsible for running the partnership and who is merely an investor. This is particularly important when it comes to establishing who is responsible for any of the business's actions in court.
It's not enough to write the document, but you must also file it with
the state, typically with your state's Department of Corporations. To
do so, you provide the appropriate department with several copies of the
agreement and pay an establishment fee. Don't worry, the fee is
deductible on taxes.