General Partnership

To understand limited liability partnership (LLP), an understanding of general partnership is required. In a general partnership, members of a firm who not a corporation or limited liability company (LLC) are all partners, and are all personally responsible for business debts, can be individually sued for the entire amount of a business debt, and can make binding decisions for the entire business.

Limited Partnership

In a limited partnership (LP), at least one person is a general partner and at least one is a limited partner. The limited partner has little input in business deals, but are not personally liable for business debts, and do not face self-employment taxes like general partners.

Limited Liability Partnership

In an LLP, there are no general partners, only limited partners. No one is liable for another partner's debts or problems, including court judgments and malpractice claims.

Advantages of an LLP

An LLP is an excellent way to avoid becoming personally liable for a partner's debts or malpractice. As limited partners, the partners are not subject to self-employment taxation. Some states don't allow the formation of LLCs for professionals, and forming a corporation can be an expensive and troublesome process.

Liability

While an LLP will protect a partner from another partner's malfeasance, he is still liable for his own personal malfeasance, malpractice, negligence or incompetence. However, if the malfeasance is on the part of a employee or agent of the LLP, the partners are not liable.

Source:

Nolo: Limited Partnerships and Limited Liability Partnerships

The Free Dictionary: Legal Dictionary

Companies House: Limited Liability Partnerships