As the name suggests, a Limited Liability Partnership (LLP) is a Partnership in which some or all of the Partners have limited liabilities. This has the attraction of merging elements of a Partnership with that of Limited Companies.
LLP’s in England and Wales are governed by the Limited Liability Partnership Acts 2000 and an LLP is a separate legal entity. It is necessary for an LLP to be registered with Companies House and for annual accounts to be filed.
An LLP is often seen as an alternative structure for any business that:
- Currently operates as a traditional Partnership;
- Has a consistent number of Members; and
- The Members each make comparable contributions and draw similar profits.
This structure may also be of particular benefit if the activities of the Partnership involve high risk services or there are likely to be claims upon the business.
In an LLP an individual is not personally liable for the debts of the Partnership unless Personal Guarantees have been given. Each Partner or Member is, however, still taxed individually on their share of the profits made by the Partnership, , rather than the LLP itself being taxed as a Corporation.
The Corporate and Commercial team here at Butcher & Barlow will discuss with you whether an LLP is the right structure for your business. If it is, it is recommended that you draw up a Members Agreement to govern the relationship between Members, in particular dealing with the capital and income shares of the Members together with provision for additional Members, retirements and death. We will use our commercial and practical experience to ensure that your business gets off to the best possible start.