Limited partnerships versus of limited liability partnerships: when you are starting any business, choosing that business's legal structure can be one of the most important decisions you will ever make. It will not only have an effect on the amount of tax you pay, but also it will have an impact on the quantity of paperwork the business will need to do, as well the ease or otherwise you will have when you seek to raise money. It will also have a bearing on your liabilities.
Two structures that people consider are limited partnerships and limited liability partnerships, they are not the same, but the partnerships registration agent Coddan Ltd can help you decide which is the best for you and your business. To register a Scottish limited partnership, which comes under the Limited Partnership Act 1907. Although in England and Wales this does not have to have a distinct legal personality, in Scotland this is required.
A limited partnership (LP) is made up of one or more general partners, commonly a limited company, combined with at least one person described as a limited partner (limited partner can be another company incorporated in the UK or any other country in the world).
While the general partner manages the business's affairs, taking liability for the whole amount of debt and all the firm's obligations, a limited partner, who contributes the partnership capital or a specific amount of property, has no liability for any of the obligations or debts beyond the amount he or she has injected.
Limited partners are not allowed to: -
If and when they do, they assume liability for all the firm's debts and obligations.
Unless the Partnership Accounts (Regulations) 2008 are applied there's no obligation for a limited partnership to file annual returns or submit accounts to Companies House. What they will need, however, is to file their annual accounts to the HMRC.
Changes in the circumstances of a limited partnership have to be notified to Companies House using the special form. Where a limited partner assigns his or her share in the partnership, or a general partner turns into a limited partner then this has to be notified in the appropriate Gazette - in Edinburgh, London, or Belfast (if you will decide to register a limited partnership outside of Scotland ).
In the case if you are looking to establish a business entity which is exempt from the requirements to submit annual return to the Companies House, the limited partnership is your choice. It is, however, important to remember that this does not exempt you from the obligation to submit annual tax returns for the LP and its members to the tax authorities.
On the other hand the regulation of limited liability partnerships (LLPs) is laid down in the Limited Liability Partnerships Act 2000. A limited liability partnership (LLP) is described as a "body corporate with unlimited capacity". This combines the limited liability of its members with the tax status and organisational flexibility of a partnership. To register an LLP requires the submission of incorporation form to Companies House, or you can setting up an LLP with Coddan Ltd online.
Each member of an LLP enjoys limited liability. However, if guilty of misconduct, the members may need to contribute to the assets. An LLP has to have a minimum of two members, both of whom have specific responsibility for making sure the LLP's administrative functions are completed. An LLP must file the same sort of information to that required of a private limited company at Companies House.
This includes the annual returns and statutory year-end accounts. In addition, any adjustments in the LLP's membership, registered business address, or reference date for the accounting period - along with any charge or mortgage created by the LLP need to be filed with Companies House.
The final choice is yours how you would like to establish your business, via the Scottish limited partnership registration, or a limited liability partnership formation, via the private or a public company formation.
We are serving both UK and non-UK customers, in general, our customers from the UK do not ask questions about what type of business to choose, because they are coming to us to register a business entity, and they know what they are doing. Our EU and foreign based customers are always asking for an advise, if you would like to be as the regular UK customer, you can place an order with us online, otherwise, please contact us before you'll make the final decision how you want to be registered.