What is the major advantage of an LLP? a. It limits the personal liability of partners to only their own wrongful acts. b. It increases the liability of the partners. c. It allows the partnership to be taxed as a corporation.

Question

Business

Josue Duarte

8 September, 02:28

What is the major advantage of an LLP? a. It limits the personal liability of partners to only their own wrongful acts. b. It increases the liability of the partners. c. It allows the partnership to be taxed as a corporation.

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Answers (1)

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Hamlet · Answer 1

a. It limits the personal liability of partners to only their own wrongful acts.

Explanation:

In a limited liability partnership, the liability of the partners is limited to the amount of capital contributed by them. In the event of losses, personal assets of the partners can not be taken away to make good the losses which is the case with general partnership.

In partnership form of business, two or more individuals bring in respective capital contribution and agree to share risk and rewards in a pre determined ratio and other terms as per the clauses of partnership deed signed by all the partners.

Thus, the major advantage of an LLP is that it (a). It limits the personal liability of partners to only their own wrongful acts.