LLC Vs. family limited partnership

This section of Family limited partnership information website discusses LLC Vs. family limited partnership. LLC and C corporation is sometimes confused with family limited partnership. LLC and family limited partnership do totally different things in terms of asset protection and taxes.Forming and LLC corporation is easy, you just have to fill out the right forms.

What are the differences between LLC and a family limited partnership?

LLC corporation is still quite new so it takes some time for the laws regarding LLC to develop. For LLC, either LLC incorporation will protect tax payers against lawsuits or the LLC incorporation will not protect tax payers against lawsuits. Each state interprets the definition of LLC corporation differently. California, for example, has a huge advantage over most other states in terms of the definition of LLC. Nevada LLC has been a popular LLC for many business owners.

California LLC

In California, the definition of an LLC is crystal clear. California legislators assembled and an LLC statute was passed  years ago. California legislators then revisited the definition of LLC to clarify the definition of an LLC.

LLC is never intended to be an asset protection tool. LLC do not protect a tax payer from lawsuit. From January 2003, it was crystal clear that an LLC cannot protect a tax payer against lawsuit cases. In California, only a family limited partnership protects tax payers against lawsuits. LLC and other types of corporations do not.

Uses of LLC

LLC is used primarily to lower income taxes.

Uses of family limited partnership

Family limited partnership is used to protect tax payers against lawsuits. In the event of lawsuits, the tax payers will not have to give the plaintiff any assets or any income.