How to Form a LLP in Alaska

The Revised Uniform Partnership Act (RUPA), a model statute, defines a partnership as an organization of two or more people who operate a business together for profit.

It doesn’t matter if the parties intentionally tried to form a partnership. It is only important that the parties plan to operate a business jointly and for profit. Two primary elements will determine this: if they receive a portion of the profits and whether they have the authority to manage the company.

Consider the scenario when Persons A and B operate a coffee shop. They decide how to run the coffee business together and divide the profits. Even though they do not refer to themselves as partners, their connection satisfies the requirements outlined above to constitute a partnership.

Almost all partnerships have a partnership agreement, even though there aren’t any additional legal requirements that must be satisfied before a partnership may be formed.

What is an LLP?

In a limited liability partnership (LLP), the individual partners are exempt from both some of the debts and liabilities of the partnership as well as those of all of the other partners. No one partner is individually liable in a lawsuit brought against the partnership as a whole. This distinguishes it from a general partnership, in which all members are responsible for the debts and responsibilities of the partnership.

In that all partners can actively participate in business management and that business losses and gains are distributed among partners in accordance with their partnership agreement, a limited liability partnership is comparable to a general partnership.

A limited liability partnership resembles a general partnership in several ways, but. Particularly, all partners can actively participate in business management in both limited liability and general partnerships. Additionally, in accordance with the governing partnership agreement, all company losses and gains are distributed among the partners of the partnership.

In general, limited liability partnerships are only used by professionals, such as accountants and lawyers, to protect the partners from being held accountable for the mistakes or wrongdoing of the other partners.

What Conditions Must an LLP Meet?

The following criteria must be met in Alaska in order to form an LLP:

• You must submit a Statement of Qualification to the Alaska Corporate Division in order to establish an Alaska Limited Liability Partnership.
• You must also give the name of your LLP. Make sure it is original and not already being used by any other corporate entities or trademarks in Alaska. The words “registered limited liability partnership,” “limited liability partnership,” the abbreviation “LLP,” or the designation “RLLP” or “LLP,” in uppercase or lowercase letters, must appear in the name of an Alaska LLP.
• Every Alaska Limited Liability Partnership (LLP) is required to have a statutory agent who will act as the LLP’s representative in all matters and take legal actions on the LLP’s behalf. The statutory agent must have a P and be a state resident.
• Since an LLP is a distinct legal organization from its partners, you must obtain an Employer Identification Number from the IRS.
• A copy of the Statement of Qualification must be published in the county where the LLP’s major place of business is located within 60 days of the Corporate Divisions giving its approval.
• In Alaska, forming an LLP does not necessitate the use of a partnership agreement, but it is advised. What each partner may and cannot do while making business decisions would be spelled out in a partnership agreement.
• If you are selling items and collecting tax as part of your business, you may need to register with the Department of Revenue (DOR) and apply for a business license.
• You must file an Annual Report with the Corporate Division in Alaska.

What Documents Do I Need to Create an LLP?

You must submit a Statement of Qualification to the Corporate Division with the following information in order to establish an Alaska Limited Liability Partnership:

• Name of the LLP in full
• Address of the LLP’s office
• Address of LLP’s agents
• Name and address of every LLP partner

How Can You Create a Partnership Agreement That Works?

An agreement between the partners, known as a partnership agreement, explains the rights and responsibilities that each partner has to the partnership as well as the relationship that each partner has with the firm.

It might also consist of:

• How much or how much of the partnership each member owns;
• Which partners are permitted to make decisions on the partnership’s business;
• The process through which the partners will settle business disagreements;
• How to dissolve or transfer the partnership;
• The steps taken to bring on new partners; and
• The partners have established any additional guidelines or processes to handle crucial matters or make significant judgments.

What Perks Does an LLP Receive from Alaska?

In Alaska, limited liability partnerships provide a number of advantages. These advantages are:

• Limited Liability: In an LLP, all limited partners are safeguarded and given management authority over the company.
• Tax advantages: In an LLP, profits and losses pass via the company to the partners, who each pay taxes on their individual income tax returns, share in the profits and losses, and are not subject to double taxation.
• Flexibility: Limited liability partnerships give partners and business owners freedom in choosing how to run their companies. The choice of how each partner will personally contribute to the management and running of the organization is theirs. According to each partner’s experience, they can also divide up the company’s tasks.

What Drawbacks Does Alaska Offer an LLP?

LLPs have some drawbacks despite the benefits they provide, such as:

• Death of a Partner: Even if the remaining partners wish the LLP to continue, it is automatically dissolved when a partner passes away.
• Partners Do Not Need to Agree: In an LLP, partners do not need to agree on all business decisions. A partnership agreement is advised before the LLP is established to specify what each partner may and may not do.
• No IPO: LLPs are not allowed to raise money from the general public or participate in an initial public offering (IPO).

What Other Information About Limited Liability Partnerships Should I Know?

One of the main benefits of creating an LLP is that partners are protected from the LLP’s liability, as has been highlighted numerous times above. The limited liability partnership itself, however, has the right to bring legal action against specific partners. Partners are most frequently sued for violating the terms of the partnership agreement or for doing something else that costs the partnership money.

An individual partner may also file a lawsuit against the partnership to enforce the partnership agreement. To uphold their legal rights to pertinent information about the partnership and an equal share of the profits made by the business, individual partners may also file lawsuits against the partnership.

If a partner’s decisions caused them financial injury, they would typically file a lawsuit against that partner. If the individual partner, however, acted under the partnership’s authority, the individual would probably sue the partnership.

Should I Employ a Business Attorney?

The success and structure of a company depend on the choice of the appropriate business entity. You can weigh the benefits and drawbacks of selecting a certain business entity by consulting a local Alaska corporate lawyer who is experienced with LLPs. A lawyer can assist you in drafting the necessary filing forms for your state if you feel an LLP is the best option.