LLP's also known as Limited Liability Partnerships are popular because they give the benefits of limited liability but allow its members the flexibility of organising their internal structure as a traditional partnership.
IAn LLP is an alternative corporate business vehicle that gives the benefits of limited liability but allows its members the flexibility of organising their internal structure as a traditional partnership. The LLP is a separate legal entity and, while the LLP itself will be liable for the full extent of its assets, the liability of the members will be limited.
The Limited Liability Partnerships Act 2000 and Regulations 2001 came into force on 6 April 2001.
Any new or existing firm of two or more persons can incorporate as an LLP.
LLPs are required to provide financial information equivalent to that of companies, including the filing of annual accounts. Among other things, they are also required to:
File an annual return
Notify any changes to the LLP's membership
Notify any changes to their members names & residential addresses
Notify any change to their Registered Office Address
Designated members are responsible for carrying out certain duties including some of those that would normally be carried out by a company director or secretary. They include such things as:
Signing the annual accounts
Filing the annual accounts and annual returns with Companies House
In the event of Insolvency proceedings, providing any statement setting out the affairs of the business i.e. assets, debts and liabilities
An LLP is taxed as a partnership. The internal structure of the LLP is similar to that of a partnership. The members provide working capital and share any profits. Income derived by the members from the LLP will be closer to that of a partnership than to the dividends paid by companies.The Act also provides that any partnership converting to an LLP will receive relief from stamp duty on any property transferred in the first year, subject to conditions. Members will be liable to pay Class 2 and Class 4 National Insurance contributions.
LLPs are available to any lawful business that is carried out with a view to a profit.