Our firm’s business law group routinely assists traditional business partnerships with their legal needs (though we recommend that most partnerships recast themselves as limited liability companies or S corporations). Often partnerships form without their owners even knowing they have, by default, chosen a partnership as their business structure. According to Washington law, a partnership forms whenever one or more people or entities carry on a business together for profit, whether or not they a partnership agreement or file any documents with the government.
If you have a partnership or limited liability partnership (LLP), we invite you to call us for assistance with your legal needs, whatever they may be. Our attorney’s legal backgrounds reflect our commitment to excellence, and cost-saving technologies enable our firm to charge less than most competing firms, even small ones.
Frequently Asked Questions:
I hear partnerships don’t protect their owners from liability, but other entity structures do, like corporations and limited liability companies (LLCs). What does that mean? Most business entities automatically create a legally enforceable separation between their owner’s assets and liabilities and the business’s assets and liabilities. The practical impact is that owners typically are not liable for claims against the business; the claimant can collect from the business only. We call this a liability shield or corporate veil. Partnerships provide no such liability shield. The business’s creditors can collect against the assets of the business’s owners.
Can a partnership become a different type of entity, such as a corporation or limited liability company (LLC)? Yes, and we can help.
What is the difference between a partnership and a limited liability partnership (LLP)? Partnerships and LLPs are different business structures. No formal documents are necessary when creating a partnership, whereas LLPs come about after the owners file associated documents with the government. Contrary to a traditional partnership, an LLP provides at least some protection for an owner’s assets, though not as much as an LLC or corporation.
What is the difference between a partnership and a limited partnership (LP)? Partnerships require no government filings and offer no liability shield whatsoever. LPs require government filings and provide a liability shield for the limited partners. In this context, limited partners are owners who contribute to the business financially but who do not run it. Of note, LPs provide no liability protection to their general partners, who run the business. Corporations and LLCs are preferable to LPs unless the owners are real estate developers.
My understanding is that partners are liable for claims against their business. Can I loan money to a business without becoming a partner and exposing myself to that liability? Yes, though you may want legal help drafting the lending documents, and you should not, in any way, help run the business.
I want to put a partnership agreement in writing. Is that enforceable? Yes, assuming the partners all sign (or the partners otherwise evidence their agreement in a legally enforceable manner).
My partner won’t let me see our business’s books. Is that legal? No, partners have certain rights and duties. Once such right is to see the books, even if the partnership agreement says otherwise.