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My friend and I are in the process of putting together a business plan to pursue opening an event hall. This event hall will be used for a space for people to rent for birthday parties, small wedding receptions, baby showers, etc. The business will be a joint partnership with everything done 50/50. In doing our research, we were wondering if we should register the business as LLC or LLP?

Asked on November 7, 2017 under Business Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

An LLC is the better choice. A limited liability company is a simple to set-up and operate business organiztion which provides strong protection for you and your personal assets (e.g. house; money in your own bank account) from any business-related liability or obligations apart from obligations your personally guaranty or "fiduciary" tax debts (payroll or sales taxesu owed to the government). You can select "pass through" or "disregarded entity"  status when setting up the LLC, to avoid double "corporate" taxation and be able to take advantage of any tax losses on your personal returns.
Before setting it up, think about how want to handle certain contingencies if they arise--e.g. what if one of you wants to be bought out? Does the other one have to buy his/her partner out? If so, for what amount? Etc. Think through those issues and put instructions for them into the "operating agreement" you will create for the LLC, to guide you in the future.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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