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Home LLP & Limited Partnerships UK Limited Liability Partnership Advantages Main Characteristics of an LLP in the UK
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7. The Main Aspects of a Limited Liability Partnership

The main characteristics of a limited liability partnership in the United Kingdom are as follows: -

  • There must be at minimum of two members
  • At minimum, two of the members must be designated members
  • A registered office address in the country of registration is required
  • The name of the members of a limited liability partnership are available on the public records
  • Accounting records must be maintained and kept at the registered office address
  • Annual accounts and annual returns must be submitted to the companies registrar
  • Although itself is not the subject to corporate taxation, a limited liability partnership must file an annual informational of its tax return
  • A limited liability partnership must be a commercial venture operating for the business profit

The main advantages of a limited liability partnership registration are as follows: -

  • All of the members to enjoy the limited liability
  • The liability of the members is limited to the amount of their investment into a partnership
  • Unlike a company, which may only trade within the objects stated in its memorandum of association, a limited liability partnership has unlimited capacity
  • A limited liability partnership provides the more flexible management structure
  • A limited liability partnership is transparent for the tax purposes and will be taxed in a similar way to a partnership, with members being taxed individually on their ownership of the limited liability partnership's income or gains
  • The less public scrutiny, because the partnership agreement remains the confidential
  • The easier manipulation of the ownership in between partners
  • The easier changes of the membership
  • No administration relating to the issue and allotment of membership
  • Easier expression of administration, roles and the management in a partnership agreement
UK LLP Establishment

Of all the legislation of the last few years, the creation of limited liability partnerships is one of the most interesting: -

Limited liability generally the essence of a limited liability partnership for practical purposes is as a vehicle to contain a partnership of any size where partners may be at risk from the careless or accidental negligence of a colleague. For example, partners in international accountancy firms would be protected from personal liability if a claim was successfully pursued by a major client. Partners in a construction business would be protected if a new building collapsed, causing high level claims against them.

Protection for a non-active lender a limited liability partnership may also be appropriate for a partnership where some partners are not actively involved. They might have once been called "sleeping" partners. This will suit both a company and an individual lender.

Limited Liability Partnership (LLP)

Limited Liability Partnership (LLP)

A limited liability partnership is a body corporate with a separate legal personality similar to a limited company. Unlike in a normal partnership, the members of an LLP enjoy limited liability as the name suggests - liability is limited to the amount of money they have invested in the business and to any personal guarantees, they have given to raise finance. Each member takes an equal share of the profits, unless the members' agreement specifies otherwise.

Easy in, easy out, to register a limited liability partnership structure is more suitable for a group of people engaging together in a property or finance venture where it may be necessary to account for partners coming and and going more frequently than you would expect in a normal partnership business.