Setting up a Limited Liability Partnership

Negotiating business partners

A limited liability partnership is a relatively new business type. It is a business type found in the United Kingdom. If you are looking for a similar United States business type, a close relative would be the Limited Liability Corporation.

In the United Kingdom, it is most often used by those who would otherwise choose a general partnership. Companies like doctor's offices and accounting firms choose a limited liability partnership to provide protection to the partners. Partners are generally protected from liabilities that are incurred by the business. With a general partnership, partners are liable for all the debts of the business.

A LLP must have at least two members. Regardless of how many members there are, at least two must be designated. If none are designated, then all members will be considered designated. A designated member has to perform additional duties relating to various legal obligations.

You can register your LLP directly with Companies House through an application online or via mail. You can also register your LLP through an accountant or a solicitor. Your specific application should list the appropriate fee. If you need to expedite your application, you can generally do so by paying an additional fee.

It isn't required that you write an official deed of partnership. That document details which partner is responsible for what and how the partnership is to be run. However, if you don't write a deed of partnership, you will be subject to the Limited Liability Partnerships Act 2000. The HM Revenue and Customs website can give you more information about the Act and what to expect. If you do decide to write your own deed of partnership, you may want to have a solicitor review the deed. The advantage to writing your own deed is that the partners agree on whatever terms you want. You aren't subject to the whims of a government agency. In addition, with the terms officially written down, everyone knows what's expected of them. If someone fails to fulfill their duties to the partnership, you have a legal document to help you get some recourse.

Once you've registered your LLP, there are additional requirements you must fulfill.

Fill out form LLP2, an incorporation form, and submit it to Companies House. Also make sure you actually receive the Certificate of Incorporation.

Make sure your LLP name is used for all stationary and business displays of any sort, including any signs for your office.

Notify HM Revenue and Customs of your existence and remember to file your annual tax return.

File an annual set of accounts and an annual return with Companies House to keep your LLP up to date.

Make sure you notify the appropriate agencies if anything should change.

You can find quite a bit of information about the process on Business Link. Not only can they guide you through the process, but they provide links to a variety of forms, sources and additional information.


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