This page is here to set out the facts about Limited Liability Partnerships, explaining what they’re and laying out the questions you need to ask to choose whether it is one of the best structure for what you are promoting. Nothing on this page or website is meant as legal advice, and we recommend that you just seek appropriate skilled advice if you will have any doubts about one of the best structure for what you are promoting.
What’s a Limired Liability Partnership
A Limited Liability Partnership combines features of quaint partnerships and limited liability corporations. Like limited liability corporations they provide the protection of limited liability to the shareholders. Like traditional partnerships they provide a versatile and tax structure and governance arrangements.
Limited Liability Partnerships (LLPs) are very recent, having been introduced as late as 6 April 2001. LLPs were designed for traditional skilled partnerships equivalent to solicitors, accountants or architects whose skilled bodies had not previously allowed them to include as limited corporations.
Advantages of Limited Liability Partnerships
o Unlike a standard partnership partners (also referred to as members) can limit their personal liability for issues equivalent to worker liability.
o Limited Liability Partnerships allow for more flexibility with voting rights and rights to partnership assets when the partnership ends. This may be especially useful when allowing for brand new or retiring partners.
o The tax treatment may be advantageous in comparison with corporations
Find out how to Form a Limited Liability Partnership
An LLP must have the suitable forms filed with Firms House to be formed, in the identical way as a limited company. A Certificate of Incorporation is issued by the Registrar of Firms on receipt of those forms.
As a word of warning, Firms House will check the proposed name before incorporation to be certain that the name just isn’t utilized by an organization or one other LLP. We strongly recommend that you just return your accomplished documentation as soon as possible because Firms House runs on a ‘first come, first served’ basis. A delay can mean that you’re going to lose your name to a rival.
The Partnership Deed
We strongly recommend that you will have an agreement to determine the duties, rights and responsibilities of every of the partners and to set out how the business can be run on a everyday basis. The laws has few provisions that govern these relationships.
We offer a model Partnership Deed that:
o Acts as a proper agreement setting out the rights and obligations of the partners in the course of the existence of the partnership
o Sets out the conditions when the partnership is dissolved
o Gives details of profit share (with a presumption of equal profit share)
o Allows for monthly salaries to prepay profit shares.
o Permits you to set the choice making procedures
o Puts in place holiday arrangements
o Sets rules for partners outside interests.
How is a Limited Liability Partnership taxed?
Limited Liability Partnerships are, mostly, taxed in the identical way as traditional partnerships. The taxman “looks through” a partnership’s profits and treats them as the non-public income of the partners, with each partner being assessed on their share of the LLPs income or gains. There are some differences with the normal partnership a loss relief just isn’t unlimited for the limited liability partner.
When a standard partnership converts to limited liability status, an exemption from stamp duty is normally granted on the transfer of the partnership property so long as all of the partners in the present partnership transfer to the LLP with similar interests.
How is a Limited Liability Partnership Managed?
You must be certain that any agreement addresses how the LLP is managed and what the duties and responsibilities of every of the members is.
LLP partners are free to choose their internal relationships, in the identical way as conventional partnership. Since the Limited Liability Partnership is a separate legal entity it could actually hold property and enter into contracts. Like an organization, an LLP continues as before even when its members change.
