The key differences between an LLP and a limited company are:
- An LLP does not have any directors, shareholders or guarantors; instead it has members, who are more commonly referred to as 'partners'. There must be at least 2 members to register an LLP, but there is no upper limited to the number of members permitted.
- LLPs are governed by the Limited Liability Partnership Act 2000 and The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009, rather than the Companies Act 2006.
- LLPs are taxed as partnerships, meaning they are not liable for corporation tax but each member is personally responsible for paying Income Tax and National Insurance on their individual profit.
Benefits of considering a LLP
- LLP profits are shared between all members.
- The method of taxation for LLPs allows for an increased level of tax transparency, in addition to and allowing members to remain separate.
- You can appoint another company (termed as a ‘corporate body’) to be a member of an LLP. Any corporate members would be liable for corporation tax rather than Income Tax.
- LLP members can be based anywhere in the world - there is no requirement for members to be UK residents.
Forming a Limited Liability Partnership
We offer a dedicated package for incorporating Limited Liability Partnerships.
In order to register your LLP. The following key points are important.
- All LLPs must be registered with Companies House, the official Registrar of Companies in the UK.
- An LLP must have a minimum of 2 members. You must also assign at least 2 ‘designated’ members who are responsible for ensuring all legal obligations of the company and its members are met.
- All LLPs must provide a registered office address for incorporation. This must be a full postal address (not a PO Box Number) in the same company as incorporation.
- Designated members must ensure Inland Revenue is informed of the LLPs existence and that a partnership tax return is filed each year.
- LLPs must be formed with the view to making a profit, which means this business structure is not suitable for non-profit organisations.