A limited liability partnership (LLP) is a way of structuring a business. Limited liability partnerships are frequently adopted by professional organisations such as accountants and law firms, but the structure can also be advantageous for other types of businesses.
Limited liability partnerships differ from ‘traditional’ business partnerships, and also from the limited company structure, and are regulated by various pieces of legislation including the Limited Liability Partnership Regulations, 2001. In this article, What Is Limited Liability Partnership Firm, we take a look at the process involved and the options available to you.
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How to set up an LLP
An LLP, which stands for limited liability partnership, is an organisational structure that falls somewhere between a partnership and a limited company.
In terms of taxation, a limited liability partnership (LLP) resembles a partnership in that it operates without paying tax and its members (or “partners”) are taxed individually on their portion of the LLP’s profits. Additionally, the LLP’s management is typically a collaborative effort among its members. In contrast to partnerships, limited liability companies (LLPs) are more comparable to private companies, including the fact that they exist independently of their members and that LLP members have complete limited liability.
By completing and submitting a form ‘LL IN01’ along with specific other documentation to Companies House, an LLP is established. The LLP will be formally established once a certificate of incorporation is issued by Companies House.
What are the pros and cons of an LLP?
In contrast to a traditional partnership, the primary advantages of a limited liability partnership (LLP) are limited liability and a separate legal identity from its partners. This allows it to own property, enter into contracts, grant security, and litigate (or be sued) in its own name. One advantage for each partner is that their liability is not joint and several with the other partners, as would be the case in an unlimited partnership structure. In addition, compared to limited companies, the flexibility of partnerships in management and operations is more advantageous to LLPs.
An obligatory filing of annual accounts and specific other documents with Companies House, which are publicly accessible on the register of companies, constitutes one of the drawbacks associated with LLPs. Additionally, transferring an interest in a limited liability partnership (LLP) generally entails more intricate procedural aspects compared to transferring shares in a limited company.
Who owns the partnership, and what are the responsibilities of the partners?
Members own a limited liability partnership (LLP) and are entrusted with specific obligations, one of which is to adhere to the partnership agreement. Designated members assume the following additional responsibilities:
- Partner registration for self-assessment and, if applicable, VAT
- Maintaining accurate accounting records
- Annual account preparation and filing with Companies House, including an annual confirmation statement.
- Notifying Companies House of any modifications to the organisation, including the updated registered office or members’ information.
- Whether or not an auditor is appointed.
- Representative of the LLP in the event of its dissolution or liquidation
How we can help
We have a proven track-record of dealing with limited liability partnership businesses. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
Deciding when (or whether) to incorporate, what kind of ownership
How to Contact Our Corporate Solicitors
It is important for you to be well informed about the issues and possible implications of a limited liability partnership. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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