A Limited Liability Partnership (LLP), simply defined, is a separate legal entity with an identity distinct from that of its individual members. A limited liability partnership has all the powers of a limited company. But, most partnership laws do not apply to a Limited Liability Partnership, though the structure and the arrangements between partners may be somewhat similar.
LLPs have existed only for a couple of years, since April 2001, to be exact. In the beginning, LLPs were created for professional bodies of solicitors, lawyers and accountants who were not allowed to incorporate as limited companies in the past.
There are many benefits to having a Limited Liability Partnership. These are:
LLPs have existed only for a couple of years, since April 2001, to be exact. In the beginning, LLPs were created for professional bodies of solicitors, lawyers and accountants who were not allowed to incorporate as limited companies in the past.
There are many benefits to having a Limited Liability Partnership. These are:
- LLP’s allow partners (also known as members) to limit their personal liability. This is its main benefit. Individual partners are not collectively liable for the company’s debts. Unlike in a general partnership where every partner is personally liable for outstanding debts, in a limited liability partnership, members are liable only to the extent of their investment. Hence the name of the structure.
- They allow more flexibility in voting and rights to assets once the partnership ends. This is useful especially when a partner/s is retiring.
- LLPs attract tax reductions by a large margin.
To form an LLP, a partnership must be able to file the appropriate forms with the Companies House, just like a limited company. Fulfillment of this requirement will allow the Registrar of Companies to issue a Certificate of Incorporation.
Just like any business, Companies House has the right to check the applicant’s name before it is incorporated to make sure that it has no duplicates. To avoid this situation, check the listing for names so that you will not have to experience a delay in your registration.
Once you have registered, it is highly recommended that you and your partners form an agreement where the duties, rights and responsibilities of each partner is laid out in detail and where you have written a clear account of how the business will be run. This is called a partnership deed. It is created to ensure that from that day forward, your business will run smoothly and all the responsibilities are well delegated to each partner.
Aside from the partner’s rights, responsibilities and duties, it will also include the conditions when the partnership is dissolved, details on the profit share (most LLP’s have an equal profit share), the decision making process the LLP should follow and any other detail that the partners agree upon.
The most important part of the partnership deed is the agreement on how the LLP is going to be managed and the delegation of duties and responsibilities of each of the members.
The partnership deed allows the partners to decide on the nature of their internal relationships, in the same way as conventional partnerships do. Because the Limited Liability Partnership is a separate legal entity it can hold property and enter into contracts. Like a company, an LLP continues as before even when its members change.
Just like any business, Companies House has the right to check the applicant’s name before it is incorporated to make sure that it has no duplicates. To avoid this situation, check the listing for names so that you will not have to experience a delay in your registration.
Once you have registered, it is highly recommended that you and your partners form an agreement where the duties, rights and responsibilities of each partner is laid out in detail and where you have written a clear account of how the business will be run. This is called a partnership deed. It is created to ensure that from that day forward, your business will run smoothly and all the responsibilities are well delegated to each partner.
Aside from the partner’s rights, responsibilities and duties, it will also include the conditions when the partnership is dissolved, details on the profit share (most LLP’s have an equal profit share), the decision making process the LLP should follow and any other detail that the partners agree upon.
The most important part of the partnership deed is the agreement on how the LLP is going to be managed and the delegation of duties and responsibilities of each of the members.
The partnership deed allows the partners to decide on the nature of their internal relationships, in the same way as conventional partnerships do. Because the Limited Liability Partnership is a separate legal entity it can hold property and enter into contracts. Like a company, an LLP continues as before even when its members change.
