Limited Liability Partnership
Limited Liability Partnerships are a relatively new form of business entity (only came into existence in 2000). It is effectively a cross between a company and a partnership, operating as a partnership but limiting the liability of the members. An LLP has its own separate legal identity and has to be registered at Companies House. It has the organisational flexibility of a partnership and would have a partnership agreement detailing how the partnership will work.
The members of an LLP will be free to agree amongst themselves the relationship between them, as partners do in a partnership. The LLP itself will be a separate legal entity owned by the members which means that the LLP will be able to continue in existence independent of changes in membership.
Taxation is the same as for a normal partnership, but annual accounts must be filed at Companies House within strict time limits.
Advantages
- Liability of members is limited (although they may still be asked for personal guarantees in certain circumstances).
- Organisational flexibility of a partnership
- Taxation is the same as for a partnership
Disadvantages
- Annual accounts must be prepared and filed with Companies House.
- There are some set-up costs
- Still some Companies House administration burden – more than for a normal partnership
- Not as easy to raise money as a company
Documents
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