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What is a Limited Liability Partnership?
What Is a Limited Liability Partnership?
Are you considering running your business as a limited liability partnership in the UK? This guide will tell you what you need to know about a limited liability partnership, how it is formed, and its differences from limited companies.
A limited liability partnership or LLP is a hybrid business structure or legal entity formed under the Limited Liability Partnerships Act 2000. The Act came into effect on April 6, 2001. LLPs must comply with regulations such as the Limited Liability Partnership Regulations 2001 and the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009.
How Is an LLP Formed?
Limited liability partnerships (LLP) can be formed by registering the LLP with Companies House, the official Registrar of Companies in the UK.You can form a limited liability partnership with two or more members to make a profit. That means that non-profit or charitable organisations cannot establish an LLP. Members must come up with a written agreement that indicates conditions on how the business will operate, including profit sharing, dispute settlement, and member responsibilities.
Members or partners do not need to be UK residents, but the registered office address of the LLP must be based in the UK.
An LLP is taxed like a partnership. Designated members pay tax depending on their share of the profits but are not personally liable for the business’s debts. Accountants, solicitors, surveyors, consultants, architects, and other professionals prefer a limited liability partnership since it offers the benefit of protected liability and allows them to keep their individual earnings, as opposed to a limited company with shareholders.
The steps you need to take in setting up an LLP are as follows:
- Have at least two designated members
- Choose a name
- Have a registered address
- Create an LLP agreement
- Register your LLP (you can use Companies Made Simple for easy set up)
Most LLP registrations are now done online. Companies Made Simple provides a full suite of services for aspiring entrepreneurs and industry professionals who want to set up a business or partnership. If you’re interested in registering your LLP with us, we need these details from you:
- Name of the LLP
- The country where the registered office is located
- The address of the registered office
- The names and addresses of all members
Naming Your LLP
Your name must end in “Limited Liability Partnership” or “LLP” and cannot be the “same as” or “too like” another registered company’s name.
“Same as” Names
“Same as” names are names where the only differences from an existing name are either one of the following:
- punctuations or special characters, like the “plus” (+) sign
- a word or character similar in appearance or meaning
- a word or character used in UK company names (“company” or “co”)
Example: “Alluring Scents Ltd” and Alluring Scents, UK” are the same.
You can only register a “same as” name under the following conditions:
- your LLP is part of the same group as the company or LLP with the existing name
- you have written confirmation that the other company has no objection to your name
“Too like” Names
You may have to change your name if another company complains that your name is “too like” theirs.
Example: J & K Consultants Ltd and J and K Consulting Limited
See tips on how to choose the best name for your business.
LLPs versus Limited Companies
An LLP is neither a partnership nor a company. A limited liability partnership is similar to a limited company in the following criteria:
- Is a legal entity separate from its members
- It must be incorporated with Companies House either directly or through a company formation agent like Companies Made Simple.
- It must file a Confirmation Statement and Annual Accounts every year with Companies House.
A limited liability partnership differs from a limited company by the following criteria:
- Is solely for profit-making businesses
- There must be an LLP agreement stating how the LLP will be run
- Must have at least two designated members who are responsible for statutory filing and other requirements
- Its structure is flexible and can be modified by their members
- Does not pay corporation tax
Set up Your LLP Now
Companies Made Simple has formed over 1 million companies. The entire process can be done online, quickly and easily. Our LLP setup service includes registration with Companies House in as little as three working hours, a free LLP agreement, a printed certificate of incorporation, and a free domain name.