Limited liability partnership package

What is a limited liability partnership?

When you register a company , you have various options, including a Limited Liability Partnership (LLP). An LLP enables professionals such as accountants, architects, solicitors and medical practitioners in partnership to benefit from limited liability.

What businesses usually operate as LLP?

Limited liability partnerships are typically formed by professionals, including accountants, architects, solicitors and medical practitioners. In some cases, registering an LLP offers more advantages than a limited company, and today, many family-owned businesses use the LLP model. If you have specific questions on the tax implications and benefits, please seek advice from a tax consultant.

What are the basic requirements to form an LLP?

• You must have a registered address (also known as your principal place of business)
• An LLP must have at least two members or partners. There is no upper limit on the number of partners in an LLP
• An LLP must appoint “general” and “limited” partners
• An LLP must register with Companies House

Who are the officers of an LLP?

In a limited company, a business will have a director (or directors) and, sometimes, a secretary. In a limited liability partnership, however, the company will have at least one “general partner” and one “limited partner”. General and limited partners have different responsibilities and levels of liability for any debts the business can’t pay. All partners pay tax on their share of the profits.

Why form an LLP?

The main benefit of registering a limited liability partnership is that the members’ (or partners’) private assets are protected. In the case that the business fails, the partners will only lose the money they have invested; their private assets will stay secure. If something goes wrong in an unregistered partnership, on the other hand, all partners can be held liable for the debts of other partners. As such, an LLP offers more security to its partners and can prevent the business from substantially affecting a partner’s personal finances should it fail.

What are the statutory responsibilities of an LLP?

An LLP has various responsibilities, including:

• Maintaining statutory registers, including a register of LLP members and PSCs (Persons of Significant Control)
• Filing accounts
• Trading — the company cannot be registered as dormant
• Filing a confirmation statement with Companies House
• Existing until it is formally terminated (via dissolution or a similar process)

How long does it take to register an LLP?

Our LLP formation application process is entirely online. Typically, your LLP will be registered within three to six hours, but this time can vary depending on the workload of Companies House on the day.

If I plan to employ others, should I choose an LLP or LTD company?

If your business has two or three members who draw similar salaries and make similar contributions, registering an LLP might be the best option for you. However, if you are likely to employ people whose payroll will be higher than the owners’ salary, a limited company may suit you better. We recommend seeking advice from a tax consultant to discuss your options.

How does partnership work in an LLP?

Partners’ responsibilities

You must appoint at least one “general partner” and one “limited partner”. A partner can be an individual or a company. Whether you are a general or limited partner affects your liability for the partnership’s debts and your responsibilities.

You cannot be a general and a limited partner at the same time, and all partners are equally responsible for any debts or obligations until the partnership has been officially registered.

Limited partners

As a limited partner, you:

• Contribute an amount of money or property to the business when it’s set up
• Are liable only for debts up to the amount you’ve contributed
• Can’t manage the business
• Can’t remove your original contribution
• Must register for self-assessment with HM Revenue and Customs (HMRC).

General partners

As a general partner you:

• Are liable for any debts the business can’t pay
• Control and manage the business
• Can make irreversible (“binding”) decisions for the business
• Can apply for your business to act as an authorised contractual scheme (ACS).

You must:

• Register the business with Companies House
• Register the business for self-assessment with HMRC — you must also register separately as an individual
• Register the business for VAT if you expect to have an annual turnover of more than £85,000
• Act for the business if it’s wound up and dissolved
• Send accounts to Companies House if the general partner is a limited company.

Is a formal partnership agreement required for an LLP?

It is not a legal requirement to have a partnership agreement, but we highly recommend it, as it will help to prevent any partnership disputes in future.