Is an LLP a better fit for your needs than a private limited company?

A limited liability partnership, or an LLP, is a way to combine the benefits of limited liability and traditional partnerships. They’re available to any “two or more persons associated for carrying on a lawful business with a view to profit”.

Who are LLPs for?

LLPs are a great option for traditional professional partnerships such as solicitors, accountants or architects who have been prohibited by their professional bodies from incorporating as limited companies but require the benefits of limited liability and corporate status.

What are the benefits of an LLP?

When forming an LLP, you can choose a company name of your choice, each member can limit their personal liability, members can set out different rights, and because it is a separate legal entity, an LLP can hold property, enter into contracts, sue, or be sued in its own right. LLPs are also taxed differently in that profits are treated as personal income of the members.

How many people do I need to form a limited liability partnership?

You will need to have a minimum of two designated members to form an LLP. A minimum of one physical person is a requirement which means you could have a company active as a second member.

There is no age limit for the members, except Scotland where they need to be at least 16, and no country of residence restrictions providing the registered office is in the UK.

Do I need a partnership deed?

It is recommended to draw up a partnership deed when forming an LLP. It should include:

• An outline of general planning
• Plan for change
• Include a buying clause for if someone leaves the company
• Pinpoint individual roles
• Outline how decisions are made and disputes are resolved
• Set out long term goals
• Summarise the financing of the business

Can a charity or not for profit organisation incorporate as an LLP?

No, a limited liability partnership is only available to businesses that intend to profit.

What is the difference between an ordinary member and a designated member?

Designated members have the same rights and duties as ordinary members of the LLP that are governed by the partnership agreement or the law. However, the law places extra responsibilities on designated members, including:

• appointing an auditor (if required)
• signing the accounts on behalf of the members
• delivering the accounts to the Registrar
• notifying the Registrar of any membership changes or change to the registered office address or name of the LLP
• preparing, signing and delivering the Confirmation Statement
• acting on behalf of the LLP in the event that it is wound up and dissolved

Designated members are also accountable in law for failing to carry out these responsibilities.

What are the LLP disclosure requirements?

These are very similar to those of a limited company. Limited liability partnerships must file their annual accounts each year as a limited company would, as well as file a Confirmation Statement, notify Companies House of any changes to membership and any changes to the registered office address.

Is a limited liability partnership the right fit for you? If so, we offer some great value formation packages