LLC vs LP: What’s the Difference?

Delaware Limited Partnerships (LP) and Limited Liability Companies (LLC) may seem similar to new business owners due to their flexibility and pass through tax treatment. However, understanding the differences between LLCs and LPs in structure, personal liability, and reputation is important when choosing the best entity for your new business.

LLCs vs. LPs: The Similarities


Organizers of LLCs and LPs are given similar levels of flexibility in how they define the rights and responsibilities of the entity's members, as well as how the entity is structured. These aspects are defined via the Operating Agreement (LLCs) or Limited Partnership Agreement (LPs); both of which are internal agreements that remain in force until amended or changed by unanimous consent of all company members or partners.

 For instance, investors in an LLC or LP company can provide for whatever voting or economic terms they desire, and can alter the standard of care and fiduciary duties which participants in the business owe to one another. Delaware law provides certain limited default terms that will govern in the event that the operating agreement of the entity is silent on an issue, but the LLC and LP forms are each intended to give maximum effect to the participants’ freedom to contractually provide for terms they deem appropriate.

Pass-through tax treatment

Pass-through tax treatment, common to both limited partnerships and limited liability companies, typically means that the business itself is not subject to federal income tax. However, each investor will often be required to report his/her share of the business's income, gain, loss, and deduction. For more information on pass-through tax treatment, please speak with an accountant or tax professional.

Simple start-up & low filing fees

LLCs and LPs have a relatively easy setup process. Both require a unique company name, a registered agent, a Certificate of Formation/Certificate of Limited Partnership, and a small filing fee to get started. Your can start your own Delaware LLC or LP with Harvard Business Services, Inc. on our website. Simply visit our order page and follow the simple steps to create the business entity of your choice.

How long does an LLC last? How long does an LP last? 

Typically, and entity is considered to be perpetual by default. An LLC in Delaware can last indefinitely with no expiration unless otherwise stated on the Certificate of Formation. Similarly, when forming an Limited Partnership in Delaware it can last indefinitely with no expiration unless stated on the Certificate of Limited Partnership.


LLCs vs. LPs: The Differences


A limited partnership is composed of general partners and limited partners. A general partner may be responsible for daily management of the company, but limited partners can only invest in the business and share its profits or loss. Limited partners cannot be active participants in the day-to-day operations of the company.

A limited liability company can have as many owners (known as members) as it would like. The rights and responsibilities of an LLC's members are outlined in the LLC's Operating Agreement. Unless the Operating Agreement states otherwise, all members have the right to participate in the business' management.

A limited partnership can have a limited liability company serve as the general partner. However, as the name suggests, the limited partnership needs two general partners to be labeled as a limited partnership. 

Personal liability

Perhaps the most important difference between a limited partnership and an LLC relates to the personal liability of the participants. A limited partnership is managed by one or more general partners who control the day-to-day operations of the business.

These general partners have unlimited personal liability for the debts and obligations of the limited partnership, meaning they can be held personally liable for those debts and obligations. A limited partner typically does not have personal liability for partnership obligations, but is not permitted to participate in the day-to-day management of the limited partnership.

Learn more about General Partners and Limited Partners.

To avoid the personal liability of a general partner, an entity such as an LLC is often created to serve as the general partner of a limited partnership.

The LLC was created to offer the flexibility of a partnership while providing corporation-like protection against personal liability. One or more of its members can manage an LLC, in the same way that a general partner could in an LP, but each member’s role can be defined differently in the LLC’s Operating Agreement.

A participant engaged in the management of the business is typically not held personally responsible for the liabilities of the LLC, vs LPs are typically held personally responsible for the liabilities. Consequently, if an LLC is involved in a lawsuit, the members’ homes, cars and personal bank accounts are not typically considered at risk for the LLC's obligations


Another difference between LLCs and LPs is their taxation options. By default, both LLCs and LPs will be taxed as a partnership, but LLCs can elect to be taxed as a C-Corp Entity Level Taxation, an S-Corp partnership-like taxation, or as a disregarded status. Learn more about Delaware LLC Tax Status.

Naming Conventions

When creating a your unique company name for your LLC or LP, the ending requirements are similiar, but slightly different. When naming an LLC in Delaware, you must use the letters LLC, L.L.C., or the words "Limited Liability Company" in the company name. For an LP, you must include, LP, L.P. or the words "Limited Partnership." Furthermore, neither LLCs nor LPs can include words such as "bank" or "insurance" etc. unless you have receive proper consent.


The Delaware LLC is by far the most popular type of Delaware entity. In 2021, 73% of the state of Delaware's new formations were LLCs, while only approximately 7% were LPs.

How Do I Convert My LLC to an LP?

Delaware does allow for the conversion of on type of entity to another type of entity. This would include filing a Certificate of Conversion. If you'd like to obtain the cost to help in preparing and submitting the documents, our team at Harvard Business Services, Inc. is here to provide support.


At Harvard Business Services, we've formed over 300,000 businesses since 1981, and we’re here to help you form your Delaware LLC or LP. Choose a button below, give us a call at 800-345-2677, or live chat with us today to get started.

Form a Delaware LLC Now Form a Delaware LP Now

Since 1981, Harvard Business Services, Inc. has helped form 413,817 Delaware corporations and LLCs for people all over the world.

Registered Agent Service

Harvard Business Services, Inc. guarantees your annual Delaware Registered Agent Fee will remain fixed at $50 per company, per year, for the life of your company.