Arkansas lets entrepreneurs structure their businesses and enterprises in a great many ways. For most folks, that means forming a general partnership. While partnerships are easy to set up and easy to administer, they have the potential to cause problems if one of the partners mismanages their finances or if the business runs into any legal trouble.
If you are thinking about starting your own general partnership—or have one already—you may wish to consider establishing a limited liability partnership instead.
Arkansas Limited Liability Partnerships
A limited liability partnership, or LLP, is a risk-averse business arrangement.
Unlike traditional partnerships, an LLP lets all the individual partners be free from the debts and liabilities of the other partners, as well as certain debts and liabilities from the business.
If someone gets hurt on your company’s property, for instance, neither you nor any other partner would be personally liable for the injury—meaning that, even if your business must pay a penalty, the courts can’t typically go after your house or other assets.
Limited liability partnerships offer another benefit, too: unlike “limited partnerships,” every owning partner is entitled to play a critical role in business operations. This means that partners can shore up their responsibilities as needed.
Forming an Arkansas LLP
Forming an Arkansas limited liability partnership is a fairly straightforward process, as follows:
- File a Statement of Qualification. This goes to the Arkansas Secretary of State, to whom you will also pay the associated fee.
- Choose a business name. Unlike general partnerships, LLPs have to have a distinct name.
- Name a statutory agent. This person will be responsible for the LLP’s legal affairs. This statutory agent must be an Arkansas resident or a resident of another partner’s state of residence.
- Apply for an Employer Identification Number (EIN). You will obtain this through the IRS.
- Register with the Arkansas Department of Finance. Consult your attorney to find out if this is necessary for you.
- Draft a partnership agreement. While this isn’t required in order to form an LLP, it is often advisable. Ask your lawyer to help you.
- Get your business license. Whether you need one will depend on what type of enterprise you’re establishing.
- File your annual report. Your attorney can make sure you remain compliant with all laws and requirements.
How an Attorney Can Help
Arkansas limited liability partnerships have their advantages and disadvantages, all of which should be weighed before making a decision.
An Arkansas business attorney can not only help you find out which entity is best for your business, but they can also help you create a customized plan to reduce your company’s liability, decrease your tax obligations, and ensure your protection against malicious customers and employees.
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