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”.
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.
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.
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.
It is recommended to draw up a partnership deed when forming an LLP. It should include:
No, a limited liability partnership is only available to businesses that intend to profit.
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:
Designated members are also accountable in law for failing to carry out these responsibilities.
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.