Some business structures sound so similar that it is easy to confuse one for the other. However, even the slightest difference between business types could affect how your business operates. The distinction between a limited partnership and a limited liability partnership is a good example.
As Chron explains, a limited partnership and a limited liability partnership are both business structures led by partners, but they do not offer the same level of liability protection for all the partners involved, nor do they provide partners with equal measures of control over the business.
Partner control over the business
If you form a limited partnership, you may not have much control over your business depending on the kind of partner you are. Limited partnerships consist of a general partner who has the power to manage the business and a limited partner who invests in the business but otherwise does not actively run the company.
By contrast, a limited liability partnership allows all partners to exercise control over the business. The exact degree of control partners have may vary according to specific businesses, but as a part of an LLP, you could be an active participant in business operations.
Differences in partner liability
The degree of liability you expose yourself to depends on whether you are in a limited partnership or an LLP. As a limited partner in a limited partnership, your personal assets would have protection from lawsuits, whereas as a general partner you could lose your residence along with other assets if a court rules against you in a civil suit.
This is not the case for partners in an LLP. All partners enjoy the same protection from litigation. Additionally, you do not have to worry about losing assets if another partner gets sued. Liability protection will shield you even if another partner faces litigation for damages.
The availability of an LLP
Given that an LLP offers significant liability protection, you might find it to be the more attractive option. However, sometimes states do not allow entrepreneurs to form an LLP unless the profession belongs to a high-risk business like legal representation or financial accounting. Your options will depend on what business structures Oregon law permits entrepreneurs to form in given situations.