{"id":4910,"date":"2021-12-01T15:28:20","date_gmt":"2021-12-01T20:28:20","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/what-is-an-lllp.html"},"modified":"2025-10-24T16:29:00","modified_gmt":"2025-10-24T21:29:00","slug":"what-is-an-lllp","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/what-is-an-lllp.html","title":{"rendered":"What is an LLLP?"},"content":{"rendered":"\n
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What is an LLLP?<\/h1>\n\n
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\n By Kimberly Lekman, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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A limited liability limited partnership<\/span> (LLLP<\/span>) is a legal business structure<\/span> that provides limited <\/span>liability protection<\/span> to all partners including general and limited partners<\/span>.<\/p>\n\n <\/div>\n\n\n\n

A limited liability limited partnership<\/span> (LLLP<\/span>) is a type of\u00a0legal structure<\/a>\u00a0for businesses. People may refer to a\u00a0legal structure as a\u00a0business structure<\/span>, business entity<\/span>, or business ownership form.<\/p>\n

The LLLP<\/span> is a newer type of <\/span>business<\/span> structure<\/span> that offers a different twist on the traditional partnership. In an LLLP<\/span>, all members of the partnership benefit from limited liability. With limited liability, investors and partners are only financially responsible for business liabilities up to the amount of money they put into the company. So, if your LLLP<\/span> becomes\u00a0insolvent<\/a>, business creditors cannot come after your home, vehicles, or personal accounts.<\/p>\n

Other types of legal structures with limited liability include limited liability companies<\/span> (LLCs<\/a>),\u00a0corporations<\/a>, limited partnerships (LPs), and more. Sole proprietorships<\/span> and general partnerships<\/span> are business structures<\/span> that do not offer limited liability. If you have a\u00a0sole proprietorship<\/span><\/a>\u00a0or a general partnership<\/span>, your personal assets<\/span> could be on the line for your company\u2019s debts<\/span> and lawsuits.<\/p>\n

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General Versus Limited Partners<\/span><\/h2>\n

Like other\u00a0types of partnerships<\/span><\/a>, LLLPs<\/span> have both\u00a0general and limited partners<\/span>. It can be helpful to be clear on the difference between these two types of partners before going any further.<\/p>\n

A general partner<\/span> is involved in the day-to-day operations<\/span> of a business. They have authority and responsibility for company issues.<\/p>\n

A limited partner<\/span> is a\u00a0silent partner<\/a>\u00a0who invests money in the business. Limited partners<\/span> do not get involved in daily operational decisions.<\/p>\n

If you have an investor who simply wants to put money into your business without becoming involved with the company\u2019s operations, this person is well suited to be a limited partner<\/span>.<\/p>\n

LLLPs<\/span> Versus LPs<\/h2>\n

LLLPs<\/span> should not be confused with LLPs<\/span> or LPs. This can seem like an alphabet soup, but it\u2019s important to understand the distinctions among these partnership types.<\/p>\n

An LLLP<\/span> is actually a type of limited partnership (LP). In some states, it\u2019s possible to convert an LP into an LLLP<\/span> by filing some additional paperwork.<\/p>\n

Traditional limited partnerships have both limited partners<\/span> and general partners<\/span>. The limited partners<\/span> enjoy personal <\/span>asset<\/span> protection<\/span> through limited liability. But the liability of the <\/span>general partners<\/span> for the company\u2019s\u00a0lawsuits<\/a>\u00a0and\u00a0debts<\/a>\u00a0is unlimited. Unlimited liability<\/span> for business debts<\/span> is a major drawback for the general partners<\/span> in an LP.<\/p>\n

The main advantage of an LLLP<\/span> over an LP is that all partners in an LLLP<\/span> enjoy limited liability. In other words, the general partners<\/span> can manage an LLLP\u2019s<\/span> daily operations without becoming personally liable for the company\u2019s obligations.<\/p>\n

However, many owners of LPs and LLPs<\/span> have a general partner<\/span> that is not an individual. Instead, these companies make an LLC<\/a> or a corporation their general partner<\/span>. In this case, there is no individual on the hook for either the LP\u2019s or the LLLP\u2019s<\/span> business<\/span> obligations. Instead, the LLC or corporate general partner<\/span> risks liability for the company\u2019s debts<\/span> and obligations. This may be the reason why some states feel that the LLLP<\/span> structure<\/span> offers an unnecessary added layer of protection to LP members.<\/p>\n

LLLPs<\/span> Versus LLPs<\/span><\/h2>\n

LLLPs<\/span> and limited liability partnerships (LLPs<\/span>) offer similar liability protections<\/span>. But an LLLP<\/span> has both general partners<\/span> and limited partners<\/span>. With LLPs<\/span>, there is no distinction between general partners<\/span> and limited partners<\/span>. In this way, an LLP<\/span> is like a\u00a0general partnership<\/span><\/a>. All partners share the responsibilities of the business. But unlike a general <\/span>partnership<\/span> structure<\/span>, an LLP<\/span> offers limited liability for its members.<\/p>\n

The most important distinction between an LLLP<\/span> and an LLP<\/span> is that LLLPs<\/span> have general partners<\/span> and limited partners<\/span>. By contrast, LLP<\/span> members are all equal partners.<\/p>\n

Where are LLLPs<\/span> Available?<\/h2>\n

LLLPs<\/span> are only recognized in about half of the\u00a0states. You should check with your secretary of state<\/span> to see if this business structure<\/span> is available where you do business. If you operate in many different states, you should probably opt for a different type of\u00a0legal structure<\/a>. Or you should find out whether LLLPs<\/span> are legally recognized in all the states where you\u00a0operate.<\/p>\n

To illustrate, consider the populous state of California. California does not allow for the formation of an LLLP<\/span> within the state. However, its\u00a0Uniform Limited Partnership Act<\/span> of 2008<\/a>\u00a0allows out-of-state LLLPs<\/span> to operate in California. Meanwhile, business owners<\/span> can create LLLPs<\/span> in nearby New Mexico, according to\u00a0state statutes<\/span><\/a>.<\/p>\n

As you may have noticed, state business laws are subject to change. Regulations on business formation<\/a> also vary widely among jurisdictions. Before deciding on your form of business<\/span>, you should make sure that it\u2019s available in your state. If you have any doubts, it would be wise to consult with a local\u00a0business attorney<\/a>.<\/p>\n

Why Form an LLLP<\/span>?<\/h2>\n

An LLLP<\/span> is useful if you want to form a new business<\/span> partnership that has both general and limited partners<\/span> who all have personal <\/span>liability<\/span> protection<\/span>.<\/p>\n

LLLPs<\/span> are most common in the\u00a0real estate<\/span><\/a>\u00a0industry. This structure allows real estate<\/span> investors to limit their financial liabilities even if they get involved in the day-to-day <\/span>operations<\/span> of the business<\/span>. When many partners get together to build hotels or apartment buildings, this structure enables them to manage the project without putting their personal assets<\/span> at risk. Some of the investors may be offsite or even overseas. Therefore, they want to make an investment without risking personal liability<\/span>.<\/p>\n

You should be aware that there can be some tax complications to starting an LLLP<\/span>. The tax treatment of different business entities<\/span> varies\u00a0by state. So, you should talk to your accountant or an attorney if these tax issues are a concern.<\/p>\n

Why Form an LLC?<\/h2>\n

For many\u00a0small businesses<\/span><\/a>, a limited liability company<\/span> (LLC) is an excellent legal structure. Like an LLLP<\/span>, an LLC<\/a> gives limited liability to business owners<\/span>. Another advantage to LLCs is that individuals and state agencies widely recognize this structure. LLCs offer a flexible structure and are easy to dissolve too.<\/p>\n

If all of your co-owners want to be involved with managing your business, then an LLC will be preferable to an LLLP<\/span>. With an LLLP<\/span>, at least one of the members would be a silent, or limited, partner. Unlike an LLLP<\/span>, you can even form an LLC with a single member.<\/p>\n

Setting up an LLC is a relatively simple process. Typically, you need to submit forms, a filing fee, and your articles of organization to your secretary of state<\/span>.<\/p>\n

Articles of organization<\/a>\u00a0are not difficult to write. This document will contain basic information about your business. You will need to provide:<\/p>\n