How to Form a LLP in Mississippi

In Mississippi, a limited liability partnership (LLP) is a way of structuring a business entity as a partnership that provides limited liability to its limited partners as well as the structural and tax flexibility of a partnership. The limited liability characteristic of the LLP protects the assets of its limited partners from the debts, losses, and legal claims related to other partners and, in many cases, the partnership itself. Limited liability is why LLPs are favored by licensed professionals who are always at risk of malpractice lawsuits, e.g. doctors and lawyers.

Also, like general partnerships, LLPs avoid the taxation of the partnership as a business entity and the organizational requirements associated with corporations. They operate under partnership agreements as opposed to corporate structure and the legal mandates that apply to corporations. In Mississippi, an LLP offers all of its partners limited liability.

What Are the Requirements for Forming an LLP?

A LLP can only be formed under Mississippi state law. While there is a lot of flexibility in creating and structuring LLPs in Mississippi, there are a few requirements:

• Select a Name for the LLP: This name must be different from all other business names on record at the Mississippi Secretary of State and must include either “Limited Liability Partnership,” “L.L.P.,” or “LLP.” Once an LLP has chosen a name and confirmed that it is available, it should protect its right to the name by recording it with the Mississippi Secretary of State’s office. It is protected for 5 years;
• Name a Registered Agent: Mississippi requires all LLPs to have a registered agent for service of process to ensure that they have an official to receive important documents, e.g. letters from the Internal Revenue Service (IRS) or lawsuits, if any should be initiated. A registered agent can be any resident of Mississippi or any business that is authorized to do business in Mississippi. The agent or business must have an address in Mississippi.
• Submit Form Establishing LLP: The Mississippi Secretary of State allows a partnership to fill in the required information after registering with their website. The formation form requires the name of the LLP, the principal office of the LLP, the name of the registered agent, the signature of 2 partners, and the business address of the registered agent, which must be in Mississippi.
• Optional Partnership Agreement: An LLP does not have to have a partnership agreement in Mississippi, but it is a good idea for a variety of reasons detailed below;
  Annual Report. Mississippi does not require LLPs to file annual reports.

What Paperwork Do I Need to Form a LLP?

A partner or their representative, e.g. their attorney, can fill out the form required for formation of an LLP on the website of the Mississippi Secretary of State. This form, along with the processing fee of $250 can be submitted directly online or can be delivered to the Secretary of State.

While an LLP is not required to have a partnership agreement, it is advisable to have one for a variety of reasons. A partnership agreement can clarify in advance a number of things that can arise in the life of an LLP. For example, it expresses the intention of the partners to form a partnership and specifically an LLP. Among the most important things that can be specified in a partnership is what happens if a partner must exit the partnership and whether it continues in the event of a partner’s exit or should be dissolved.

Of course, partners are in business to reap a profit from their labors, and a partnership agreement can specify how the LLP’s profits are to be distributed among the partners. A partnership agreement also gives the LLP the opportunity to provide that alternative dispute resolution methods should be used in resolving disputes among partners or between partners and outside entities.

A partnership agreement gives the partners the opportunity to control the consequences of events rather than being controlled by them. The type of events that might lead to dissolution of a partnership are such things as:

• The death of a partner;
• A partner going into personal bankruptcy;
• The divorce of a partner;
• The term of the written partnership agreement expires and it needs to be renewed;
• One partner decides to give notice to the other partners of their intention to dissolve the partnership;
• One or more partners become legally unable to own a business;
• A partner successfully applies to a court for an order to dissolve the partnership.

What Paperwork Do I Need to Form an LLP?

The forms required to establish an LLP can be completed on the website of the Secretary of State. The filing fee can be submitted on the website as well.

What Are the Advantages of an LLP in Mississippi?

There are several reasons why a business might want to adopt the structure of an LLP:

• Limited Liability: Like a corporation, LLPs shield the personal assets of its limited partners from any debts and legal liabilities of the company. It is usually important to the partners that they are protected from the liability of each other for professional malpractice;
• Pass-Through Tax Entity: LLPs are taxed as a pass-through entity and avoid the double taxation associated with corporations. This means that the LLP itself is not taxed on the LLP’s income. Rather, the LLP’s profit is passed through to the limited partners. The partners are then taxed according to their individual income tax bracket when they receive a share of the LLPs profits;
• Survivability: Unlike a general partnership, an LLP does not have to be reformed every time a partner exits the partnership;
• Late Filing: An existing general partnership can convert to a limited liability partnership at any time, if it fulfills the requirements listed above;
• General Partner Liability: Unlike a limited partnership, an LLP is not required to have a general partner who is liable for the actions and debts of the partnership.

What Are the Disadvantages of an LLP in Mississippi?

While the limited liability an ability to avoid the double tax associated with corporation can be appealing, there are a few disadvantages to structuring a business as a LLP:

• Filing and Fees: Unlike a general partnership or sole proprietorship; LLPs require submission of forms to the Mississippi Secretary of State and payment of a $250 filing fee. Formation may require the assistance of a lawyer.

Should I Hire a Business Lawyer?

If you need a lawyer to help you with structuring your business, then contact a local Mississippi corporate lawyer today to get the help you need. An experienced Mississippi business lawyer can help you select the form for doing business that best suits your purposes, whether that is the LLP structure or something else. Your attorney can then help make sure you do all of the necessary work to establish your LLP including drafting a workable partnership agreement.