It is a structure that gives the benefits of limited liability and allows its members the flexibility of organising their internal structure as a traditional partnership.
The main difference between a Limited Liability Partnership and a Limited Company (Ltd) is that the LLP is taxed as a partnership, therefore no corporation tax. In other respects it is very similar to a limited liability company.
Every LLP must have at least two designated members who may be corporate or individual members.
After incorporation, you inform Companies House about:
Designated members have the same rights and duties towards the limited liability partnership as any other member. These mutual rights and duties are governed by the limited liability partnership agreement and general law.
Designated members are responsible for:
The key features of an LLP are:
It is a corporate body and therefore a separate legal structure distinct from its members. The LLP can own and hold property, employ people and enter into contractual obligations.
An LLP has unlimited capacity which means that third parties need not be concerned about any restrictions on its activities.
An LLP has members but not directors or shareholders. An LLP has no share capital and is not subject to the company law rules governing the maintenance of capital.
The members of an LLP have limited liability.
An LLP has complete flexibility as to the internal structure which it wishes to adopt: there are no requirements for board or general meetings or decision making by resolution. An LLP does not have a Memorandum or Articles of Association.
As the members have limited liability, the protection of those dealing with an LLP requires that the LLP maintains accounting records, prepares and delivers annual accounts to the registrar of companies, and submits an annual return in a similar manner to companies. The exemptions available to companies, as in the delivery of abbreviated accounts and exemption from audit also apply to LLPs.
The management structure is addressed by the members in a separate LLP agreement and this agreement is not filed at Companies House and remains a private document.
A member of an LLP will be subject to obligations under the statute as an agent of the LLP and under the LLP agreement or, in the absence of any agreement, under the default provisions contained in the regulations. A member who is a designated member will have the additional responsibility of compliance with the statutory obligations imposed on designated members which were noted above.