What is a characteristic of a limited liability partnership (LLP)?

A limited liability partnership (LLP) is specifically designed to limit the personal liabilities of the partners involved. This means that the personal assets of the partners are generally protected from being taken to satisfy the debts or claims against the partnership. In an LLP, partners are not personally responsible for the wrongful acts or negligence of other partners, which is a key feature that differentiates it from a general partnership where partners can be personally liable for business obligations.

This characteristic allows individuals to take part in the management of the partnership without exposing their personal wealth to business risks, making it an attractive structure for many professionals, such as lawyers and accountants. The structure encourages collaboration while safeguarding personal assets.

The other options do not accurately describe the nature of an LLP. For example, a LLP does not subject partners to unlimited personal liability, does not inherently avoid income taxes since partnerships typically pass income through to the partners, and does not require all partners to be actively involved in the management of the business, allowing for a more flexible arrangement regarding management duties.