UK LLP as a Business Structure
UK Limited Liability Partnership (UK LLP) is a relatively new business structure being offered in the United Kingdom (UK). Legislation for LLP formation was formally enacted in 2000 and since then, a number of UK Limited liability partnerships have been registered in the UK. The United Kingdom Limited Liability Partnership Act has created a business entity which is suitable for professionals and other profit making businesses. A LLP is not suitable for charitable purposes.
As the name suggests Limited Liability Partnership is a business entity with members who have limited liability. This means that like a limited liability company the assets of the members will be protected and the members will not be responsible for debts of the LLP.
The limited liability partnership is a simple business structure with considerable advantages. For example, the LLP is not taxed as a corporation. The members of the UK LLP will pay individual income tax on any earnings generated from the business operations of the LLP. Potentially, UK LLPs can be tax free entities, if structured correctly. However as with all formations, we recommend to seek professional advice on taxation.
Limited Liability Partnership Formation
You can form your LLP with a minimum of just two (2) members. Limited Liability Partnership members can be individuals or corporations. There are no directors and one of the partners can be appointed to manage the assets and business of a LLP. The Limited liability partnership does not have a complex structure and this perhaps contributes to the simplicity of the Limited Liability Partnership formation process.
LLP formation process is made easier if you consider using us as your company formation agent. We will ensure that all documents required for UK LLP formation are filed as well all other information which would be required for UK Limited Liability Partnership formation by the Companies House.
LLP formation requires that a Limited Liability Partnership form be completed and the following information provided:
- A proposed name for the UK LLP
- Registered address of the limited liability partnership UK
- Name, address and nationality of proposed members
- State if all members are designated members or only particular members are appointed as designated members
The application form is submitted to Companies House along with a registration fee for LLP formation UK. If successful, a Certificate of Incorporation will be issued by the Registrar of Companies.
A Limited Liability Partnership Agreement can be drawn up by the members of the partnership. This document remains private and the standard UK Partnership Agreement essentially states how the company should be managed and the contributions made by members and other particulars with reference to the LLP. We Supply a Standard precedent agreement drawn up by legal officers on some of our packages, this is tailored for you to complete, however this is not a requirement for formation and you can make your own agreement should you choose.
Limited Liability partnership advantages can be very attractive, especially for business entities which engage in trade. Using a UK limited liability partnership for conducting business means using a company registered in a jurisdiction which is highly regarded for trade. UK companies are regarded as respected entities and doing business with a UK registered company has its plus side. Other limited liability partnership advantages of LLPs are there is no need to hold general meetings and for keeping records of meetings. UK LLPs are governed by an Operating Agreement which does not form any part of public record.
Limited Liability Partnerships (UK) Members
Your limited liability partnerships can be established with a minimum of two (2) members who can be individuals or corporations. Each LLP UK must have two designated members. The responsibilities of the designated LLP members are listed below.
- Sign and deliver LLP accounts to the Companies House
- In cases where an auditor is needed the designated member must appoint one
- Notify the Registrar of any changes made to the LLP ( change of registered address, or company name)
All members of a LLP have the same rights and duties to the LLP. Your LLP Operating agreement will lay down the laws as to the responsibility of each member to the business entity.
LLP Registration Restrictions
When choosing the names for LLP formation, there are words and phrases which are considered to be sensitive and will not be accepted by the Registrar for UK limited liability partnership registration. For LLP formation using the same name as another entity already registered in the jurisdiction is not acceptable. LLP name checks can be conducted to ensure that this does not happen. Names which will suggest connections to the Majesty’s Government or other Government institutions or public authority will not be accepted. Offensive names will be rejected.
Limited Liability Partnership (UK) — Annual Returns
It is standard procedure for filing for all UK Limited liability partnerships (active and dormant) to file annual returns with the Companies House at the end of each financial year. There are penalty fees for late filing and UK LLPs should avoid these by filing annual returns on time.
As part of our additional services package we offer accounting and bookkeeping services for UK LLPs which will ensure that accounts are prepared and filed on time to avoid any late penalties.
Is a Limited Liability Partnership a good choice for you?
There are many business entities being offered in the UK and each structure has its benefits and disadvantages therefore it is not easy to state which is the best business structure. When forming a business, as the potential owner, you must decide on the best entity based on the needs and visions that you have, as well as of how the entity will be taxed. Tax planning has become very important and most likely as the owner of the business; you will be interested in an entity which will provide tax savings.
Limited Liability partnership formation remains, and is an excellent choice of a business entity as the United Kingdom remains as one of the best trading centres and the UK Companies are well respected. Limited Liability Partnerships have a flexible structure and are easy to maintain.
