Limited Liability Partnership - LLP

Two or more people pursuing a lawful business with a view to profit can incorporate a limited liability partnership by subscribing to its incorporation document.

A limited liability partnership has the flexibility of a partnership and is taxed as such. In all other respects it is very similar to a private limited company.

• Suitable for new and existing partnerships wishing to obtain limited liability status
• Aimed particularly at professional partnerships such as accountancy and solicitors firms
• Maintains tax status of a partnership
• Members have limited liability
• Incorporation within 4 days
• Suitable for most commercial business activities

Incorporating a Limited Liability Partnership

Incorporation is a very simple process. We will ensure that the requirements of the Registrar have been met, and will submit the necessary documentation to Companies House to incorporate the new LLP.

Key Features of an LLP

• Is a corporate body, i.e. a separate legal entity distinct from its members
• May own and hold property, employ people and enter into contractual obligations
• Debts incurred are the debts of the LLP
• Has unlimited capacity, which means that third parties need not be concerned about any restrictions on its activities
• Has members, but no directors or shareholders -members have limited liability
• No share capital and not subject to company law rules governing the maintenance of capital
• No memorandum or articles of association.

An LLP has complete flexibility as regards the internal structure which it wishes to adopt; there are no requirements for board or general meetings or decision making by resolution.

As the members have limited liability, the protection of those dealing with an LLP requires that the LLP maintains accounting records, prepares and delivers annual accounts to the registrar of companies, and submits an annual return in a similar manner to companies. However, exemptions available to companies - e.g. the delivery of abbreviated accounts and exemption from audit - also apply to LLPs.

What is the difference between a Limited Liability Partnership and a limited company?

The advantages of an LLP include:

• Limited liability: reduced risk to personal wealth from creditors’ claims
• Internal flexibility: facilitates participation in management and maintenance of ethos of partnership

If the position of an LLP is compared with a private limited company, such companies have:

• Limited liability
• Internal flexibility – facilitates informal and flexible decision making in such companies, for example, allowing meetings to be called on short notice, use of written resolutions and acceptance of informal unanimous assent
• Privacy – same as LLP – disclosure subject to exemptions
• No need for LLP agreement – the memorandum and articles of association act as default standard provisions

The membership of a Limited Liability Partnership

There are no shareholders in an LLP. Instead there are members, who are identified in the initial incorporation document, with subsequent changes being reported within 14 days of the event occurring.

If membership falls to only one member and the limited liability partnership continues to carry on business for more than 6 months, then the benefits of limited liability are lost.

Designated members in a Limited Liability Partnership

Every limited liability partnership must have two designated members at all times. If there are fewer than two designated members, then every member is deemed to be a designated member (the LLP may have decided that all members will be designated members, or that only some members will be designated members).

After incorporation, you must tell Companies House about:

• The appointment of a new member or designated member
• A member or designated member ceasing to act in the limited liability partnership
• Changes in a member's or designated member's name or address or any of the other details originally registered
• Changes in a member's status (member to designated member or vice versa)