What are the key differences between an LLP and a Multi-Member LLC?

While they sound like very similar business structures, a limited liability company (LLC) and a limited liability partnership (LLP) have a number of differences. In Pennsylvania, LLCs can be formed by individuals, corporations, or other LLCs; whereas, LLPs are created from existing general or limited partnerships that file an election with the Department of State claiming limited liability status. Additionally, while multi-member LLCs can choose to be taxed as a general partnership, S-Corp, or C-Corp, LLPs can only be taxed like a general partnership. Liability protection is another area where these two types of entities diverge a little. Both business structures offer legal protections that prevent individual owners from being personally responsible for their business’s liabilities, debts, and financial losses. However, your business structure will greatly impact whether an innocent member or partner will be jointly responsible for another owner’s negligence or misconduct.