Your client and two of her associates agree to form a new business that will manufacture IT security hardware and software for the telecommunications industry. The three plan to do all the management of the business. The firm will also hire several employees in the areas of research and development, manufacturing, marketing, and financial analysis. To raise the necessary capital for the business, the three plan to have an additional 50 owners who will be passive investors in the business. All 50 have large amounts of passive income from other investments. One of the three managing owners has proposed that the business be formed as a limited liability partnership. Another wants to have a corporation or LLC. A third has suggested the limited partnership or LLLP.
For owners' liability purposes, why is the LLC better than the limited partnership?