Limited liability partnership is the form of partnership in which liability of partners is limited to the investment they have made. The partners cannot lose more than they have invested. The personal assets and property cannot be used to pay debts in case of bankruptcy; however, if personal guarantees have been signed then the creditors can access personal assets of the owners. In UK, limited liability partnership has a status of corporate body.
Benefits limited liability partnership:
Limited liability is one benefit but basically the idea of limited liability partnership is to combine the organizational flexibility of partnership and limited liability status. It has resemblance to corporate bodies, with governance structure of ordinary partnership.
Management and governance:
Partnership does not require any CEO to be appointed, to take the executive level decisions, however, the members can decide to appoint a CEO or CTO if required.
In limited liability partnership, partners are collectively responsible to the stakeholders to the extent that they have agreed, but no partner is responsible for each other’s action as in a simple partnership status.
Limited partnership also does not pay corporation tax or Capital Gains Tax. The partnership structure is unique in structure with flexibility in the profit distribution and management. Also the profits are distributed as gross to the partners as self employed persons. Partners are subject to income tax and class 4 National Insurance Contribution on the partnership profit share.
New rules state that a partner is considered as an employee if certain conditions are met. These are the main highlights of the new rules in statute:
- Disguised salary rule including the condition like LLP members perform services for LLP in exchange for an income of which at least 80% is fixed. Or income that is variable but not affected by the overall profit or loss of LLP
- The member has no significant influence over the affairs of the partnership.
- Contribution to the partnership by the member is less than 25% of the disguised salary.
Members will be treated as employees if all the conditions are met and they will be subject to rules of PAYE and tax is levied on other benefits.
If you want to register your business as a limited liability partnership, we will guide you about all the legal and economic as well as accounting aspects and implications of Limited Liability Partnership.
Limited liability company legal requirements:
All the businesses can register for limited liability partnership except for those who want to establish a not for profit or charitable organization as they cannot register as an LLP.
Limited liability partnership appoints 2 or more members, member can be a person or a company (a corporate member)
Each partnership needs to choose a
- Name of the Limited Liability Partnership
- At least 2 designated members
- Registered address in the same country in which LLP is registered.
- An LLP agreement
Members can also decide to have a written agreement. This sets how the LLP partnership will run. It includes
- The ratio in which profits are shared
- Who consents take high priority
- Responsibilities of members
- Terms for joining or leaving the partnership.
WeAccountax can provide you counseling you need to draft a partnership agreement so that it can help to resolve conflicts.
Responsibilities of designated members:
LLP must have at least 2 designated members at all times and they are responsible to keep the company accounts and records up-to-date. LLP Partnership can have any number of ordinary members.
Designated members have responsibilities like
- Registration of partner for self assessment with HMRC
- Registration with HMRC for VAT in case the supplies of a business reach the threshold level.
- Responsible for appointment of an auditor (if required).
- Responsible for keeping the accounting records of business.
- Responsible for preparation, sign and send annual accounts to the companies house
- To send a confirmation statement (previously annual return) to companies house
- If the business changes its address, name or members then he is also responsible for informing Companies House about change.
- A designated member ensures that all members complying with the statutory requirements.
- If the partnership is dissolved or wound up then designated partner is responsible for informing Companies House
WeAccountax offer the services related to the management and operations of a company
- Solid Financial Report Package Customized to Your Business
- Preparation and submission of annual accounts
- Management accounts on any desired intervals
- Monthly Bookkeeping Services or Xero Support Services
- Vat return preparations
- Matters relating to payroll
- Personal tax planning, corporation tax planning
- Advising on dividends and minimum wages
- Vat and Payroll registration services
- Cash flow budgeting
- Liaison with HMRC and relevant authorities on your behalf
- Submission tax returns to the Companies House.
How much we charge for our services?
We provide full set of accounts along with a range of additional valuable services in price which is favorable to you business.
We provide competitive fixed fee services starting from £50 for Limited Liability Partnership.
Just put your business details and receive a quotation tailored to your business.