Online Limited Liability Partnership registration
Use our online company name check, and then enter your details. We'll send you all the forms you need - sign them, and send them back to us. Your LLP will then be registered with Companies House.
General notes | Benefits | Tax and Stamp duty issues | Management
The following information is designed to give you a better understanding of the nature and scope of a Limited Liability Partnership and to help you determine if it is the right business solution for you. Nothing on this website is intended to replace, or be construed as, legal advice, and if you have any doubts about the best business entity for your needs you are recommended to seek appropriate professional guidance.
Limited Liability Partnerships are the latest business vehicle and were introduced on 6 April 2001 after The Limited Liability Partnerships Act 2000 received Royal Assent on 20 July 2000. As a business structure the LLP combines features of both limited liability companies and traditional partnerships, in that they offer the limited liability protection available to limited company shareholders but with the flexible nature and tax structure available to partnerships.
Originally Limited Liability Partnerships were envisaged to be utilised by the traditional professional partnerships such as solicitors, accountants or architects who have been prohibited by their professional bodies from incorporating as limited companies.
Rather like forming a limited company, an LLP is formed by filing the appropriate forms with Companies House. On receipt of these the Registrar of Companies will issue a Certificate of Incorporation. The proposed name of the LLP must first be checked at Companies House before incorporation to ensure that the name has not already been taken by another LLP or company. Companies House operate on a ‘first come, first served’ basis so, once you have checked your proposed name it is your own interests to return the completed documentation to us for filing as soon as possible.
It is also recommended both for business and practical reasons to have an agreement to establish the rights, responsibilities and duties of the partners to each other and outline how the business will be run as there are not many provisions contained within the Act governing these relationships.
Our Partnership Deed can be purchased for an additional fee. It sets out a formal agreement between the partners setting out their rights and obligations during the existence of the partnership and also upon its dissolution. The document specifies that all partners have made an equal investment in the business and will all share in the profits equally. A monthly salary can be paid in anticipation of annual profits. You can insert names and details of the partners, the bank account details and limits of bank authority of the partners, the year end accounting date and any specific responsibilities of individual partners. You can specify the decision making rules, holiday arrangements and whether the partners shall work exclusively for the partnership or are allowed outside interests.
Benefits of LLP
The key advantage of a LLP compared with a traditional partnership is that the members of the LLP are able to limit their personal liability if something goes wrong with the business, in much the same way as shareholders in a limited company are able to.
Where business owners have wanted to limit their personal liability in the past, they have normally set up limited companies and any profits made by those companies are subject to corporation tax. Director’s fee and dividends paid by the companies can then be taken as income of the directors and shareholders. LLP's are taxed quite differently in that the profits are treated as the personal income of the members.
There is also a greater degree of flexibility in an LLP, for example the ability to separate out different rights. An individual being made a member, or a retiring member, might also be given rights to a fixed level of income only, leaving the founders with the majority of voting rights and rights to assets on winding up.
Generally an LLP will be regarded as transparent for tax purposes and each member will be assessed to tax on their share of the LLPs income or gains, rather than at Corporation Tax rates. The internal structure of the LLP will be similar to that of a partnership. The members will provide working capital and will share any profits. Income derived by the members from the LLP will be closer to that of a partnership than to the dividends paid by companies.
An existing traditional partnership can convert to LLP status, and an exemption from stamp duty could be granted on transfer of the partnership property in this situation provided that a) all the partners in the existing traditional partnership transfer to the new partnership and their interests in the partnership property remain the same.
Management of an LLP
The members of an LLP are free to agree amongst themselves the relationship between them, rather as partners do in traditional partnership. The LLP itself is a separate legal entity and is therefore able to enter into contracts and hold property and the LLP is able to continue in existence independent of changes in membership. It is important is ensure that any agreement between members addresses the issue of management and particular duties and responsibilities of members.