LIMITED LIABILITY PARTNERSHIP
Many professional businesses, such as solicitors, accountants, consultants and doctors, that have traditionally operated in partnerships tend to form a Limited Liability Partnership (LLP) to reduce their exposure to any personal financial loss.
Unlike companies
limited by shares
and companies
limited by guarantee
, LLPs do not have shareholders or guarantors but members. In this company structure there must be a minimum of two members. There is no maximum number of members that the company can have. Members can reside and work from anywhere in the world.
The profits from an LLP are shared amongst its members. The company’s members are required to pay income tax and/or National Contribution payments on these drawings.
HOW TO FORM A LIMITED LIABILITY PARTNERSHIP
121 Company Formation offers different types of
LLP formation packages
; all include the following basic elements:
-
A draft LLP agreement (while not a legal requirement, this is a useful document should you wish to divide shares, profits or capital at a later date)
-
A full set of company incorporation documents
-
Company register
Simply select the package that best suits your needs and we will help you manage the complete the rest of the process, easily and hassle-free!
The following information is required for an online application for an LLP company formation:
-
The name of the LLP
-
The LLP’s
registered office address
-
The full details of the minimum of two members who will be appointed
-
Confirmation who will be designated members i.e. the members who will be responsible for ensuring that both the company and its members meet the statutory requirements required of them
-
The SIC code (standard industry classification code) of the LLP, i.e. the nature of its business
FREQUENTLY ASKED QUESTIONS
Many professional businesses, such as solicitors, accountants, consultants and doctors, have traditionally operated in partnerships form a Limited Liability Partnership to reduce their exposure to personal financial loss
A member can be an individual who resides in any part of the world. However, to qualify as a company member, they cannot have been previously declared bankrupt or disqualified as a company director. A member of an LLP can also be a corporate entity.
Whilst they both have the same duties and rights, a designated member has the added responsibility for ensuring that both the LLP and its members meet the statutory requirements required of them. They would also be responsible for managing these requirements should the partnership be dissolved at any time.
This company structure is only for businesses that intend to trade as profit making and therefore are required to pay tax whereas non-profit organisations need a different structure since they will not generally use the same taxation process.
Having an LLP Agreement not a legal requirement. However, it is a useful document to define each member’s share of the rights, responsibilities, and profits which may or may not be equal, or may change over time. An LLP agreement is also useful should you wish to divide shares, profits, or capital at a later date.
Yes, LLP members are required to register for self-assessment with HMRC and pay taxes on any profits that are drawn from the LLP. Each LLP member is responsible for filing and paying their own taxes by filing their own annual tax return. However, unlike private limited companies, a Limited Liability Partnership is not required to pay
corporation tax
on any profits the partnership makes.
