Question

Carol is a CPA who forms a partnership with another CPA, Pete. They form a limited liability partnership (LLP). If Carol negligently fails to correctly calculate a client's tax liability, resulting in fines to the client, what will be the outcome?

Answer 1

Answer:

Carol is personally liable for her mistake, and not Dave. Carol was negligent while Dave was not negligent.

Explanation:

Limited liability partnerships offer the advantage of being able to structure the business as a general partnership but liability is not shared by the partners. This is very important specially for some specific trades like accounting, medicine, law, engineering, etc., were liability can be a very serious issue that ranges form small fines to hefty lawsuits.