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Limited Partnerships Formation vs. LLP & LLC

Limited partnerships formation vs. LLP & LLC in England

Create an LP in London

Limited partnerships formation vs. LLP & LLC in England: a limited partnership is an agreement between two or more individuals over the running of a business. One of the partners is called general partner while the others are called limited partners. The general partner is a central investor of the business as he is supposed to pay a large sum of the capital investment. The limited partners are not bound to pay any initial investments. However, they can offer a small proportion of it on the mutual consent of all the individuals.

In a British limited partnership, the individuals bind themselves under the name of a partnership but this doesn't affect their individuality to a greater extent as they enter the legal processes, business deals, and other similar activities on their own. The limited partnership doesn’t have any credibility of its own but it’s the individuals who have.

Similar to investments and entering legal works, the profits made by the individuals and the taxes paid to the authorities by them are also different from one another. The basic tax is levied on the general partners. Limited partners are not bound to pay any major tax amounts, however, a small amount can be paid on consent.

Limited partnership formation needs you to fill the LP1 and LP3 Forms and then submit them to company's office with the fee. Within few days of the British LP registration, the partnership is listed and is ready to be used for business.

Limited companies: limited companies include one or more individuals registering their business as an enterprise. They enter into an agreement with a limited corporation which is different in approach compared to a limited partnership.

In the case of a limited corporation, the investors are known as shareholders. The main investors are known as general investors while secondary ones are called limited investors. The shareholders are not supposed to cater for the running of the business. Employees are hired in a hierarchy which ensures the streamline flow of the corporation. Unlike a limited partnership, a limited corporation has its legal identity. This suggests that the company enters into businesses, legal frameworks, sales and purchases, and other similar tasks on its own. The corporation can sue someone in the court and can be sued by individuals or other business in case a law is breached.

In a limited corporation, shareholders get profits depending upon the value of their shares. Those with a high ratio of shares will enjoy a high amount of profits compared to those with little percentage of shares.

In the case of payment of tax, individuals are not supposed to pay any taxes. The tax is levied on the enterprise which it needs to pay within specified duration. If it is unable to meet the deadlines, then government authorities can take actions against the company but neither against the shareholders nor on its employees.

Comparison between LLCs and LLPs: both LLCs and LLPs have distinct values owing to their features. However, the flexibility which an LLC offers over the taxation processes makes it more favorable compared to an LLP. As an LLC, you can pay tax either as a corporation or as individuals forming the enterprise. Moreover, the hierarchy of employees renders works easy for the management of an LLC in comparison to an LLP.