Limited Liability Limited Partnership (LLLP)
An LLLP is a new modification of the limited partnership. Similar to a limited partnership, the LLLP consists of one or more general partners and one or more limited partners. The key advantage of this form of ownership is that the general partners receive limited liability on the debts and obligations of the LLLP. California law does not allow for an LLLP to be formed in California. However, an LLLP that is formed under the laws of another state must register with the California Secretary of State prior to conducting business in the state.
- The general partners manage the business operations of the LLLP, while the limited partners typically only maintain a financial interest.
- The LLLP is a flexible form of business.
- It is 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.
- An LLLP does not pay income tax. However an LLLP must pay an annual tax of $800. The items of income, deductions, and credits "flow down" from the partnership to each partner through the Schedule K-1. Each partner is responsible for paying taxes on their distributive share.
- An LLLP remains in in existence until any agreed upon termination date.
- Every LLLP 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 LLLP provides each partner with a schedule K-1 that states the partner’s distributive share of the partnership's (LLLP's) items of income, deductions, and credits.
- The return due date is the 15th day of the 4th month after the close of the taxable year.
- An LLLP must pay an annual tax of $800.
- No estimated tax requirements.
- The LLLP may be required to withhold taxes if the partnership distributes California source taxable income to a nonresident partner. For more information about partnership withholding, see FTB 1017.