This blog post will take a look at the Limited Liability Partnership company structure and touch upon the pros and cons of operating this type of company. You may notice that a number of legal firms and even some accountants use the acronym LLP after their names and this company structure is often popular amongst certain types of business. An LLP does have its benefits but at the same time an LLP may not be the best option for everyone.
The LLP company structure is designed for businesses that usually operate as a traditional partnership. Examples of such businesses are accountancy firms, solicitors, dentists, vets, architects, surveyors, GP’s and other such professional services firms.
One of the main benefits of the LLP structure is the “limited liability” protection offered to the members or partners of the LLP. This means that the individual partners are not personally liable or responsible for business debts and their personal assets (such as the family home) remain protected during the normal course of business.
An LLP is very similar to a traditional partnership when it comes to paying taxes on company or business profits. It is not the company or the LLP that is taxed on the profits generated but instead each partner is taxed on their share of company profits via a self assessment tax return.
Benefits can arise from this when the partners within an LLP live and operate the LLP from outside of the UK and as such are not deemed to be UK tax payers.
The appeal of the company not being taxed on its profits, which is the opposite situation to limited company, depends on the personal circumstances of the partners involved with the company. This can be a relatively complex area and professional tax advice should always be sought.
What is needed to set-up an LLP?
1. At least two members are needed to form an LLP and these will be known as the “designated members”.
2. An LLP member can be an individual or a corporate body (e.g. a limited company).
3. An individual must be at least 16 years old but they are not required to live within the UK.
4. A UK address must be provided as the official LLP registered address.
If you need any advice or you are thinking of setting up an LLP then feel free to contact one of our accountants via email to firstname.lastname@example.org. We complete LLP accounts and LLP tax returns as well as member self assessment tax returns for very competitive fees. Request a free quote and see how much you can save on your current accountant fees.