An LLLP is a new modification of the limited partnership. Similar to a limited partnership, the LLLP consists of one of more general partners and one or more limited partners. The general partners manage the business operations of the LLLP, while the limited partners typically only maintain a financial interest. The key advantage of this form of ownership is that the general partners receive limited liability on the debts and obligations of the LLLP.
Key Features
- The LLLP is a flexible form of business.
- Designed to offer limited liability to all partners in the partnership.
- The partners will decide the structure of the organization and the distribution of profits and losses. A formal, written partnership agreement is advisable.
- The profits and losses "flow down" from the partnership to each partner through the Schedule K-1. Each partner is responsible for paying taxes on their distributive share.
- The general partners of the LLLP manage the day-to-day business affairs.
- An LLLP remains in effect based on partners agreeing to a termination date and as long as all of the general partners remain in the partnership.
- An LLLP may not be formed in California. However, an LLLP formed outside of California may register to do business in California and be treated as a limited partnership.
Filing Guidelines
- Every partnership that engages in a trade or business in California or earns income from California sources and every LLLP that registers with the California Secretary of State is required to file California Form 565.
- The partnership provides each partner with a schedule K-1 that states the partner’s allocation of tax items.
- The return due date is the 15th day of the fourth month after the close of the taxable year.
- An LLLP pays an annual tax of $800.
Estimated Tax
- No estimated tax requirements.