Structuring your business as an LLP, how to convert your business into an LLP: if you want to start a new business and are considering a limited liability partnership, Coddan can help. A limited liabilities partnership, or LLP, is becoming an increasingly popular alternative incorporation to the traditional limited company registration. It can be a tax effective way to organise your affairs and offers many of the advantages of a limited company, such as protection of your personal assets, with the tax advantages of a partnership and sole trader accounting.
That's because it is governed by a hybrid of company and partnership law. The Limited Liabilities Partnership Act came in to force in 2001 and was initially aimed at global partnerships, such as legal practices. The idea was that practices around the world could join forces. However, in the event one partner suffered huge losses or a malpractice claim, the other partner's liability would be limited to their initial investment. It offered a way of expanding internationally without the associated risks and was seen as a way to encourage international business.
But the concept has evolved over the years and now a number of companies have turned to LLPs to organise their affairs and they are especially popular with finance houses, commercial property developers, not-for-profit organisations and more. They are also useful when a dormant partner wishes to protect assets and has no meaningful input into the business. It also works for overseas clients who wish to bring a number of business interests together in one place and withdraw profits in the most tax efficient manner.
There are a number of benefits to an LLP. It becomes an entity, like a limited company, so the LLP itself is responsible for losses. In the event it is wound up, the founder's liability is limited to their initial investment. The LLP can also obtain a credit rating, own property, borrow funds and do almost anything a limited company can.
Just two designated members are required to start an LLP and they take responsibility for filing accounts with Companies House. Aside from those two designated members, though, others are free to come and go and the LLP continues regardless. So an LLP allows for a fluid business structure. If you take advantage of Coddan Ltd's nominees member service, as well as a registered office address, you can also keep your name off the public record entirely.
Your LLP can also benefit from a prestige business address in London, Manchester, Liverpool, Edinburgh and Northern Ireland and a separate SAIL address means the authorities won't come to your home to inspect your accounts.
Registering an LLP is more complicated than a limited company and it does cost more, so it might not be for everyone. Having founded thousands of companies, though, Coddan Ltd can advise you whether an LLP is suitable for you, as well as taking care of same-day LLP registration, VAT registration and all the other associated paperwork.