Limited liability Partnership (LLP).
Limited liability partnership (LLP) exists as a separate legal trading structure in the United Kingdom.
Accountants, Architects Doctors and Solicitors utilise limited liability partnerships to operate their practice. Other business types, though, then opt to use this business structure.
Limited liability partnerships vary from business partnerships and limited company formation. They, however, remain regulated by legislation such as the Limited Liability Partnership Regulations, 2001.
Any Disadvantages to Establishing an LLP?
- Accounts and financial status open for public view;
- More expensive to establish an LLP contrasted with a partnership;
- Controlling expenses are usually higher than a partnership due to supplementary accounting and requirement to file documents.
Limited Liability Partnership (LLP) Incorporation
It would help if you chose a trading name unique in the market place.
As with a limited company formation, no registered address required on incorporation.
You will, though need to include the following:
- Generate register containing those who have significant control;
- Description of business core activity;
- Names and details of the designated members;
- Details of other members;
- Compliance Statement.
LLP’s then may electronically register, in preference to using mail or formation companies.
Differentiation between an LLP and other business formations?
Partnerships unincorporated sustain the equivalent protection as LLPs. Partners though remain liable personally for debts contracted by the business.
Customers contract business with partners individually in a standard partnership and not the “Partnership”, as a separate legal entity.
Therefore, limited liability partnerships and limited companies may seem similar, though differences exist:-
- You may with a company guarantee a limited liability. Therefore, non-profit organisations may not wish to use an LLP structure. LLPs, remain for a profit-making organisation in business;
- You may incorporate a limited company with one person. However, limited liability partnerships require two designated members;
- Tax on Limited companies for profit is corporation tax. LLP members though are liable for tax relating to a limited liability partnership;
- Structure of limited companies remain fixed; however, members can cease using an LLP;
- Limited companies can sell shares in the company to obtain investment. LLP’s can’t.
Advantages of Establishing a limited liability partnership
Limited Liability Partnerships, however, therefore, offer the following advantages:-
- shelter of personal assets;
- the versatility of management and share of how profits distributed;
- members of LLP can be companies along with individuals;
- partnership a separate legal entity.
Responsibilities of Members’
The LLP is required to have at 2 or more ‘designated members’ at all times.
Preparing a Limited Liability Agreement
A limited liability partnership (LLP) agreement is required to encompass other members as part of establishing your LLP.
The agreement details the way the LLP is run and includes:
- Responsibilities of members;
- the way profits are shared with members of the LLP;
- the team who agree on a day to day decisions;
- mechanism of the way LLP members leaves or join the LLP.
Responsibilities Therefore of all LLP members?
Members must carry out their duties and meet their legal responsibilities set out in the LLP agreement.
Every member must register for Self Assessment with HM Revenue and Customs (HMRC).
Responsibilities of designated members.
Designated members have more responsibilities than ordinary members and then must:
- select an independent auditor if required;
- maintain accurate accounting records;
- file annual accounts at Companies House signed and agreed;
Designated members must then:
- Inform Companies House on changes (for example, to the registered name or address, or members);
- act for the LLP then it’s wound up and dissolved.
Designated members, however, remain open to prosecution when they fail to meet their legal obligations. The LLP can also be taken off the register.
Changes That Therefore Require Reporting?
Companies House therefore require;
- Notice of changes to the limited liability partnership (LLP)’s registered;
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