Legal Question in Business Law in Colorado

Business Advice Question.

I�m starting a new Aerial Videography business and want to make sure I�m deciding on the correct business model to open. There is myself in Colorado Springs, my brother who also lives in Colorado Springs and a very close friend of the family who lives in Port St. Lucie, FL. Upon the recommendation of my tax person, I have already requested registration of a Limited Liability Partnership LLP for our business.

It sounds like it�s very similar to an LLC., but it provides an extra protection level if one of the partners makes a mistake and does something to put them at risk of being persecuted for whatever reason.

From what I can tell, this is a pass through when it comes to taxes so each Partner/Member would simply claim our individual earnings on our own personal taxes at the end of the year, which is good. Pretty much the same as an LLC.

My biggest question would be, is an Aerial Videography business allowed to be licensed/registered as an LLP in Colorado? I hear this is mostly limited to Doctors and Lawyers, etc. No one can give me a straight answer. I have already applied for the LLP registration on the Secretary of State website and it took my money (of course), but I have yet to hear if I�ve been truly accepted.

My secondary question would be, would it be better to be an LLC instead of an LLP?

Thanks for your time. Hopefully you can shed some light on this question.

Phil


Asked on 2/27/15, 9:13 am

1 Answer from Attorneys
Robert Murillo Pivotal Legal Ltd.

Your business can be an LLP but the issue is whether this makes sense and most times the answer is no. An LLP and LLC have similar limited liability features. The primary distinction relates to agency authority. Under an LLP, you have partners. Each partner has full authority to bind the LLP and make the LLP liable for debts by their action. In an LLC, in contrast, you can establish a manager managed LLC and only the managers have authority to bind the entity.

Moreover, the LLC is much more flexible. You can start under default taxation (assuming more than one member) under partnership taxation. Depending on the business and its income, you can later elect for the LLC to be an association and file another election to be taxed as an S corporation.

Finally, regardless about what entity you decide to select, you MUST have a written partnership or operating agreement. This is absolutely critical whenever you have more than one person in the business. Please contact business attorneys and discuss the agreements and other strategies. Good luck with your venture and start contacting experienced business attorneys as soon as possible.

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Answered on 2/27/15, 9:51 am


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