A limited liability partnership is popular with professionals who normally operate as a partnership, such as solicitors, doctors, and architects.
An LLP does not have any directors, shareholders, or guarantors. Instead, it has members who are more commonly referred to as ‘partners’. You must have at least 2 members to register an LLP.
LLP’s are taxed as partnerships, meaning they are not liable for corporation tax but each member is personally responsible for paying income tax and national insurance on their individual profit.
You need to make an LLP agreement with any other members as part of setting up your LLP.
This outlines: how the LLP is run, how profits are shared among the members, who is the decision-maker, what are the responsibilities of each member, and how members can join or leave the LLP
Who would form an LLP?
This is a structure used by professionals working in industries that operate as partnerships such as solicitors, doctors, architects etc.
What is an LLP member?
- A member is a partner in the company.
- You must have at least 2 members to incorporate an LLP.
Who can be a member?
- A member can be any person or a corporate body.
- An LLP member must not be a disqualified director of a limited company or an undischarged bankrupt.
Do I need a partnership agreement?
- This is not a legal requirement but we recommend having one in place.
- A partnership agreement should be drawn up to stipulate the specifics of each members’ rights, duties and proportion of profits.
How are LLP members taxed?
- LLP’s are not liable for corporation tax.
- Each member must register with HMRC for Self-assessment and pay income tax on any profits they make.