A Delaware Limited Liability Partnership is a general partnership that has elected, by filing a Statement of Qualification with the Delaware Secretary of State, to shield its partners from personal liability for the partnership’s debts and for the wrongful acts of the other partners. It is governed by the Delaware Revised Uniform Partnership Act (DRUPA), codified in Title 6, Chapter 15 of the Delaware Code, and it is the structure most often chosen by professional firms — law practices, accounting firms, and similar service businesses — that want partnership-style flexibility without unlimited personal exposure.
What the LLP Shield Actually Covers
The reason to elect LLP status is liability protection. If the partnership is sued or cannot pay its bills, creditors generally cannot reach a partner’s personal assets to satisfy the claim. In a plain general partnership, each partner is jointly and severally liable for everything the business owes. The LLP election removes that exposure.
The shield has limits worth understanding before you file. Each partner remains personally liable for their own wrongful acts, negligence, and professional errors. If you commit malpractice, the LLP will not protect you from the claim against you individually. What the structure does protect is each partner from being dragged into liability for what another partner did. One partner’s mistake generally does not reach the personal assets of the others.
Partners also owe each other fiduciary duties of loyalty and care. The partnership agreement can adjust the scope of those duties, but Delaware does not permit the agreement to eliminate them. Some baseline of good faith survives whatever the written terms say.
How to Form a Delaware LLP
Formation begins with filing a Statement of Qualification with the Delaware Secretary of State. The statute uses that specific term; it is not a “certificate,” though some guides call it one. The statement elects LLP status and must include:1Justia. Delaware Code Title 6 Section 15-1001 – Statement of Qualification of a Limited Liability Partnership
- The partnership’s name
- The address of its registered office
- The name and address of its registered agent
- The number of partners at the time of filing
- A declaration that the partnership elects LLP status
- An optional future effective date, if the partners want the election to begin later rather than immediately
The name must include “Limited Liability Partnership” or “LLP” and must be distinguishable from other entity names already on file. The Division of Corporations publishes forms for formation, annual reports, reinstatement, and cancellation on its website.2Delaware Division of Corporations. Corporate Forms and Certificates for a Limited Liability Partnership
Registered Agent
Every Delaware LLP must maintain a registered agent with a physical Delaware office to accept service of process. If the partnership itself has no Delaware office, it must appoint a separate agent.3Delaware Division of Corporations. FAQs Regarding Registered Agents The agent can be the entity itself (if it has a Delaware office), an individual Delaware resident, or another authorized business entity.4Delaware Division of Corporations. Delaware Division of Corporations Registered Agent Listing Standards
Federal EIN
After the Statement of Qualification is filed, the LLP applies for a federal Employer Identification Number from the IRS. The application requires a “responsible party” — a real person who owns, controls, or manages the partnership’s funds and assets, typically a general partner — who provides their Social Security number or individual taxpayer ID. Nominees without actual control cannot be listed.5Internal Revenue Service. Responsible Parties and Nominees
The Partnership Agreement
DRUPA gives partners wide latitude to design their own governance through a written partnership agreement. The agreement typically covers how profits and losses are allocated, who has management authority, how votes are taken, how partners are admitted or withdrawn, and what happens on dissolution. It is not filed with the state, so the terms stay private.
Putting the agreement in writing is practically essential. Where the agreement is silent, DRUPA’s defaults fill in — and those defaults tend to split profits equally and give every partner equal management authority. That rarely matches what partners actually intend when contributions, seniority, or expertise differ. The agreement is also where you set voting thresholds for major decisions (bringing in new partners, taking on significant debt), designate managing partners for day-to-day operations, and build in mediation or arbitration clauses for internal disputes.
Keeping the LLP in Good Standing
Liability protection is not permanent once you file. Delaware requires LLPs to file an annual report and pay a per-partner fee by June 1 each year. The fee is $200 per partner, capped at $120,000. This is a different obligation from the flat $300 annual tax that applies to LLCs, limited partnerships, and general partnerships.6Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions Missing the report or the payment can lead to administrative penalties or revocation of LLP status, which would strip away the shield the partners are counting on.
How a Delaware LLP Is Taxed
Delaware Treatment
Delaware treats LLPs as pass-through entities. The partnership itself owes no state income tax; each partner reports a distributive share of the partnership’s income, gains, losses, and deductions on their own return, with each item keeping the character it has for federal purposes. Delaware residents owe state income tax on their full share. Nonresidents may still owe Delaware tax on income sourced to activity within the state.7Delaware Code Online. Delaware Code Title 30 – Pass-Through Entities, Estates and Trusts
Federal Filing
Federally, the LLP files Form 1065. Calendar-year partnerships file by March 15 following the close of the tax year; for the 2025 tax year, the deadline falls on March 16, 2026. An automatic six-month extension is available via Form 7004, pushing the return deadline to September 15, though the extension does not cover any tax payment owed.
The partnership issues each partner a Schedule K-1 showing their share of income, deductions, and credits, which the partner uses to prepare a personal return. Partners owe tax on their share whether or not the cash was actually distributed, a point that catches newer partners off guard. If a K-1 contains errors, request a corrected version from the partnership rather than altering numbers on your personal return.8Internal Revenue Service. Partner’s Instructions for Schedule K-1 (Form 1065)
Self-Employment Tax
Partners in an LLP are generally treated as self-employed. A partner’s distributive share of ordinary business income is included in net earnings from self-employment and subject to Social Security and Medicare tax, combined at 15.3% on earnings up to the Social Security wage base and 2.9% on earnings above it.9Internal Revenue Service. Self-Employment Tax and Partners
IRC Section 1402(a)(13) excludes a “limited partner’s” distributive share from self-employment tax. Whether LLP partners who actively participate in the business qualify for that exception remains unsettled; the IRS has not issued final regulations on the point. Guaranteed payments for services are subject to self-employment tax regardless.9Internal Revenue Service. Self-Employment Tax and Partners
Qualified Business Income Deduction
Under Section 199A, partners may be able to deduct up to 20% of their qualified business income. The deduction was created by the Tax Cuts and Jobs Act and was originally scheduled to expire after the 2025 tax year, with legislative proposals to extend it active since. Confirm its availability for the current tax year with a tax professional. When available, it phases out for higher earners and may be limited for service-based businesses like law, accounting, and consulting — the industries most likely to use the LLP structure.
Doing Business Outside Delaware
Forming the LLP in Delaware does not authorize it to operate elsewhere. If the partnership has offices, employees, or significant ongoing business activity in another state, that state will typically require registration as a foreign LLP and appointment of a local registered agent. The specific triggers for “transacting business” vary, but a physical office or regular performance of services almost always counts.
Skipping foreign registration carries real consequences. Most states bar unregistered foreign entities from filing lawsuits in their courts until they register properly, and the entity may owe back fees for every year it operated unregistered, plus civil penalties. The LLP’s contracts generally remain valid, and it can still defend itself in court — but losing the ability to initiate litigation makes it hard to collect debts or enforce agreements.
Converting or Dissolving the LLP
Delaware allows an LLP to convert into another entity type, such as an LLC, a corporation, or a limited partnership. The process involves filing a certificate of conversion along with the formation document for the new entity.10Delaware Division of Corporations. Conversion of Entity Type Conversion generally preserves business continuity, so existing contracts, property, and liabilities carry over. The partnership agreement should set the vote required to approve a conversion; without a provision, DRUPA’s defaults apply and may require unanimous consent.
To dissolve voluntarily, the LLP files a statement of cancellation with the Secretary of State after settling debts, resolving outstanding obligations, and distributing remaining assets according to the partnership agreement or, if the agreement is silent, under DRUPA’s default rules. Dissolution is not a single filing event; winding up can take months when there are ongoing contracts, pending litigation, or complex assets. Skipping the formal cancellation leaves the entity on state records and can keep the annual fee obligation running.