LIMITED LIABILITY PARTNERSHIP
A Limited Liability Partnership (LLP) combines the benefits of the traditional partnership in respect of legal affairs and tax treatment together with that of limited liability to protect partners’ personal assets. Incorporation is a simple process, which we have tailored to provide an easy route to completion of the necessary formalities. Once you are happy with your decision that an LLP is the correct vehicle for your business venture, simply follow the order process and order your LLP online.
LLP incorporations are now available electronically as with any other company we can incorporate, and the whole process is completed within hours.
As with any business partnership it is vital that the partners draw up a suitable written agreement to determine issues such as control, division of revenue and exit strategies. You may wish to consult your legal advisers in this respect or use our standardised LLP Partnership Agreement as a governing document. You will be given the option to include this during the order process, or please contact us for further details.
- Suitable for new and existing partnerships wishing to obtain limited liability status, and aimed particularly at professional partnerships such as accountancy and solicitors firms
- Maintains tax status of a partnership
- Members have limited liability
- Incorporation within hours
- Suitable for many commercial business activities where the owners wish to maintain elements of trading as a traditional partnership
- Must file Annual Returns and Annual Accounts with Companies House
- Always seek professional advice on tax matters before deciding
A GUIDE TO LIMITED LIABILITY PARTNERSHIPS
What is a Limited Liability Partnership?
The Limited Liability Partnership as a corporate vehicle was introduced on 6 April 2001, intended as a structure that gives its owners the benefit of limited liability whilst retaining many of characteristics of a traditional business partnership.
Generally speaking, an LLP is taxed in much the same way that existing non-limited trading partnerships are taxed and maintains a very similar structure as a partnership. Unlike a limited company, an LLP has no Articles of Association, but is usually governed by a partnership agreement which determines how the business structure works, sets out responsibilities of those involved and provides dispute resolution and exit strategies.
It has always been expected that LLPs will prove most attractive to professional firms such as accountants and solicitors but your professional advisers will be able to indicate whether this would be suitable for your business.
The LLP, as with a Limited Company, is a separate legal entity, and whilst the LLP itself is responsible for its assets and liabilities, the liability of its members is limited and the members’ assets are protected in the eventuality of winding up of the business. As with limited companies, however, actions may be taken against individual members who are found to be negligent or fraudulent in their dealings.
Any firm consisting of two or more members engaged in a profit-making venture may become an LLP. Many of the regulations written into the Companies Act 2006 apply equally to LLPs as they do to limited companies, including the rules relating to the name of the LLP and many of the requirements for filing of information at Companies House, such as annual accounts and annual returns.
Suitability of a Limited Liability Partnership
Unfortunately, this is not a matter for us to answer here and we strongly recommend that you research this option very carefully, taking proper professional advice from your accountant or tax adviser before making any commitment.
We shall, however, be happy to discuss your situation with you and recommend suitable advisers as necessary. Please contact us on 0161 440 8884 for more information.
Choosing a Name
The choice of name for an LLP follows the same rules as with limited companies. Companies House maintains the registry in conjunction with the present list of company names. An LLP cannot have the same name as an existing LLP or limited company and the “same as” and “sensitive names” rules apply equally. Please see our section on Choosing a Company Name, and use our standard company name check facility to determine whether your chosen LLP name is available.
Structure of an LLP
An LLP has members and designated members. With the agreement of the other members, a member may become a designated member. Designated members have the same rights and duties as any other member, but there are additional responsibilities such as signing accounts on behalf of the LLP, delivering accounts and annual returns to the Registrar, notifying the Registrar of changes to the LLP's members or registered office and acting on behalf of the LLP in the event of winding up, much in the way such duties and responsibilities fall on company directors.
An LLP must have at least two "designated members" at all times, otherwise the members' limited liability may be at risk. There is no specific requirement to have any non-designated members and there is no maximum to the number of members allowed. An LLP may be established such that all members are considered to be designated members.
In general terms, an LLP can be governed by the Partnership Agreement that may already be in force within an existing partnership, in conjunction with the general law, but there is no requirement to file any governing document at Companies House. We can provide assistance in drafting a suitable LLP Partnership Agreement if required. It is highly recommended that a formal agreement is established to ensure the business has a proper framework for the resolution of disputes between members or for the provision of suitable exit strategies. The partnership agreement may also determine revenue split between members and varying responsibilities if appropriate.
The LLP must also have an official registered office, just as with a limited company, which is recorded at Companies House. Unlike limited companies, there are no directors or company secretary, and of course, no shareholders.
As with limited companies, there is certain information that must be displayed on an LLP's stationery. All business letters, notices and publications, cheques, bills, invoices etc must bear the full name of the LLP including the words “Limited Liability Partnership” or the abbreviation “LLP”.
In addition, all business letters and order forms must show the following:
- The place of registration - eg; "Registered in England & Wales" or “Registered in Scotland”
- The registered number
- The fact that it is a Limited Liability Partnership
- The address of its registered office
NOTE: This information must also be displayed on any web site owned or operated by the LLP.