Overall, if your main concern is limiting liability or tax flexibility, an LLC is probably your best option. However, take a look at your state tax laws; some states may impose a higher tax on LLCs than LLPs.

Why would you choose an LLP over an LLC?

Similar to the LLC, the LLP is a hybrid of both the corporation and partnership, to give the greatest advantages for taxation and liability protection. The LLP is not a separate entity for income tax purposes and profits and losses are passed through to the partners.

What are the disadvantages of LLP?

LLP Disadvantages

In case an LLP fails to file Form 8 or Form 11 (LLP Annual Filing), a penalty of Rs. 100 per day, per form is applicable. There is no cap on the penalty and it could run into lakhs if an LLP has not filed its annual return for a few years.