LLP – what, why, when?
Limited Liability Partnerships are a fairly new addition to the available structures for running a business. The LLP model is becoming increasingly popular as it really is a “half way house” between partnership and a limited company.
We can advise and assist with either formation of an LLP for a business start up or in the conversion from limited company to LLP. With a Limited Liability Partnership it is also very important to carefully consider partners rights and responsibilities to each other and legally and to record these in a partnership agreement. We can prepare this for you efficiently and cost effectively based on our extensive experience of these agreements.
If you don’t have a partnership agreement, the LLP rules are solely contained in the Limited Liability Partnerships Act 2000.
Our top 5 tips when considering setting up or moving to LLP status
- There must be at least 2 designated members who will be legally responsible for statutory obligations of the LLP, including at Companies House and for LLP Tax Returns (although members are each responsible for their own tax).
- There is no separation between directors and shareholders like limited companies. with an LLP there are only members who fulfill both the role of shareholder and director.
- Rights of members can be different from each other and some members may for example be salaried members and some equity, some may have enhanced voting rights or pre-emption rights on another member leaving.
- Liabilities for the LLP debts are limited as with limited companies.
- Agree who will do what on a day to day basis, position on financial mandates and events if default clearly at the outset.
For more advice or information, please do get in contact with me.
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