Limited Liability Partnership Formation
A limited liability partnership (LLP) is a popular corporate vehicle for doing business in the UK which offers limited liability to its members.
Unlike limited liability company (LLC), LLP benefits from the organisational flexibility of a partnership and is taxed as a traditional partnership. In other respects it is very similar to a private company.
LLPs do not have a share capital, although members can make contributions to the business. An LLP is a separate legal entity and can enter into contracts and own property.
Two or more persons (individuals and companies or firms) engaged in a profit-making venture can incorporate an LLP. LLPs do not have shareholders or directors, but can have as many members as necessary.
An LLP must have at least two designated members responsible, in particular, for:
Members do not need to reside in the UK.
Members of an LLP normally sign a partnership agreement. Unlike Articles of Association, the agreement is private and is not submitted to Companies House for public record.
The agreement governs the relationships between the members, sets out their rights and duties and describes how the LLP will be run. In particular, the agreement often addresses the amount of contribution each partner must make into the LLP’s capital, the decision-making process and the way profits and losses of the LLP will be dealt with.
In the absence of such agreement, members will be governed by the Limited Liability Partnerships Act 2000.
The registered office must be a physical location where notices, letters and reminders can be delivered to the LLP by hand or post, it need not be the place of business. It is important that all correspondence sent to this address is dealt with promptly. If the address is not effective for delivering documents, the LLP could risk being struck off the register or wound up by a creditor.
An LLP offers a limited liability to its members together with the benefits of taxation of a traditional partnership.
LLPs are not generally liable for Corporation Tax.Since members, and not the LLP, are taxed on the income from the LLP’s trade, non-resident members can benefit from income tax rates applicable in their home countries.
Our package includes: