Legal help with setting up a limited liability partnership (LLP)

What is a limited liability partnership?

A limited liability partnership (LLP) is a partnership which gives limited liabilities to some or all partners of a group, company or other entity.  It's a business entity that was introduced with the Limited Liability Partnership Act 2000, for England and Scotland.

Each members pays tax on their share of the profits, but they are not personally liable or responsible for the debts the business accrues, nor for another partner's carelessness or misconduct.

In the UK an LLP is specifically legislated as a corporate body rather than as a partnership - despite the name.

Who can set up an LLP?

Anybody of any nationality may register an LLP on the condition they are not bankrupt, not subject to a restraint order and not subject to UK government restrictions

How do I set up an LLP?

You can set up (or ‘incorporate’) an LLP to run a business with two or more members. A member can be both a company and a person and is known within the LLP as a ‘corporate member’.

To set up an LLP, you must:

• Choose a business name
• Have at least two designated members
• Register a business address (this will be publicly available)
• Draw up the LLP document that states how it will be run
• Register the LLP with Companies House.

The two designated members will have the most responsibility and it is their duty to keep company accounts, among other things. An LLP can have any number of ordinary members.

What is an LLP agreement?

The agreement is between members and should set out how the LLP will be run, including:

• How profits shared between members
• Who are the decision makers
• The nature of each member’s responsibilities
• The ways in which members can leave or join the LLP.

What are the responsibilities of each member of the LLP?

Members must carry out their legal duties, as well as those defined in the LLP document. Every member must register for Self Assessment with HMRC, and designated members must also:

• Register the LLP for Self Assessment.
• Register each individual with HMRC.
• Register the partnership for VAT if you expect your taxable turnover is more than £85,000 per year.
• Assess the need to appoint an accountant or auditor.
• Keep company records.
• Prepare annual accounts and send them to Companies House.
• Maintain statutory registers and ensure compliance.

I want legal advice about a limited liability partnership - what should I do next?

It is highly advisable that you seek legal advice from specialist commercial solicitors. While the very nature of an LLP protects your interests to a certain degree, there are still a lot of responsibilities to take care of.

Get in touch with our legal advisors for a free, no-obligation review of your requirements.  Or call us using the contacts at the top of the screen.