A limited liability partnership is a legal structure designed for businesses that would usually operate as traditional partnerships. Typically, these types of businesses include accountancy firms, solicitors, dentists, veterinary practices, architects, chartered surveyors, medical practitioners, and other professional services firms.
Since the introduction of the limited liability partnership format in 2001, these firms can operate as LLPs and provide limited liability to their members (partners). This means that individual partners are not personally responsible for business debts and liabilities beyond what they invest or guarantee to the LLP.
In this sense, LLPs are similar to limited companies , but they retain the internal flexibility and tax benefits of a traditional partnership structure.
Limited liability partnerships share certain similarities with traditional partnerships:
However, they also differ in a number of ways, namely legal status, the limited liability of the partners and the professional image of the business:
A limited liability partnership is owned by members, or ‘partners’. There are no directors or shareholders. LLPs require a minimum of two members. There is no restriction to the maximum number of partners an LLP can have.
LLP members are self-employed for tax purposes. They must register for Self Assessment , pay Income Tax and National Insurance on their share of business profits and prepare their own tax returns for HMRC. The LLP itself is not taxed as a whole.
At least two LLP members are required to be ‘designated members’. In some LLPs, it is required that all partners be designated members. These partners are responsible for additional administrative duties and must ensure the LLP and the other members adhere to their statutory responsibilities. If fewer than two persons are appointed as designated members, the law views all members as designated.
An LLP member can be an individual person or a corporate body (another LLP, a company, firm, organisation, etc). Their details are displayed on public record. Any person who wishes to set up an LLP or become a member of an existing LLP must be at least 16 years old.
If you are an undischarged bankrupt or you have been placed on the Disqualified Directors Register , you are not permitted to become an LLP member until your situation changes or you are granted permission by the Court.
All members of an limited liability partnership have the same rights and duties, but designated members are assigned additional legal responsibilities, in much the same way as a director or secretary assumes such responsibilities in a limited company. These extra duties include:
Limited liability partnerships must provide a registered office for Companies House during the incorporation process and maintain it for the entirety of its existence. The registered office serves as the official contact address of a partnership where statutory mail and legal notices are delivered. Registered office details are displayed on public record.
A registered office must be a full postal address in the country in which the LLP is incorporated, i.e. England and Wales, Scotland or Northern Ireland. It is possible to change the registered office address at any time, as long as it remains in the same country and Companies House is notified within 14 days.
LLP members must provide service address details for Companies House. This will serve as their official contact address where they will receive statutory mail and notices. The details are placed on public record. LLP members may use a residential or a non-residential address located anywhere in the world. Many people simply state their LLP’s registered office as their service address.
The simplest way to register a limited liability partnership is online through a company formation agent. Rapid Formations provides a tailor-made formation package for LLPs , with registration approved in just 24 hours. To complete an online application, you will have to provide the following information:
Applications are submitted to Companies House electronically. Digital copies of your incorporation documents will be emailed to you as soon as your application is approved.
The Companies Act 2006 requires limited liability partnerships to disclose certain details to the general public at its registered office address and other places of business, on official stationery and all websites.
These trading disclosure regulations are included in ‘The Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015 (SI 2015/17) ‘, and they are in place to ensure the legal identity of every LLP is revealed to anyone who has, or may wish to have, dealings with the LLP.
With the exception of LLPs that have been dormant since the date of their incorporation, every limited liability partnership must display its full registered name on a sign at the following locations:
An LLP must also include its full registered name on all forms of business stationery, documents and communications, whether in hard copy or electronic form. This includes:
All forms of business correspondence, order forms and websites must contain the following LLP details:
If an LLP is being wound up, is in administration or receivership, or has a moratorium in force in respect of its debts, it must be stated on all invoices, order forms and business letters that it is being wound up.
LLPs must provide the following information to anyone with whom it trades with, if a written request is made:
If any such written requests are made, the LLP must comply and provide the information in writing within 5 working days of the request being made.
An LLP may choose to disclose the names of its members on its website and any form of business correspondence. In such instances, the names of all LLP members must be disclosed. You cannot simply include the name of one or a few members, other than in the body of a letter or for the purpose of signing a document.
This rule does not apply if an LLP has more 20 members, providing the LLP states on the document that a full list of members’ names can be viewed at its principal place of business.