UK LIMITED LIABILITY PARTNERSHIPS
Unlike members of ordinary partnerships, the LLP itself is responsible for any debts that it runs up, not the individual partners. The main difference is that a limited liability partnership has the organisational flexibility of a partnership and is taxed as a partnership. In other respects it is very similar to a company.
You cannot register the same name as another limited liability partnership or company. Offensive names are not allowed. The conditions set out for sensitive words under “UK private companies limited by shares” are also applicable to LLPs. All limited liability partnership names must end with the words “Limited Liability Partnership”, or the abbreviation “LLP” or the Welsh translation.
The incorporation of a UK LLP usually takes approxmiately 24 hours.
The limited liability partnership itself will not be liable for taxation on profits or gains arising within the partnership, but the profits or gains will be assessed to tax separately on the individual partners.
There are no directors or shareholders of an LLP. It has a flexible internal structure and is not required to have a Memorandum & Articles of Association.
Every limited liability partnership must have at least two appointed designated members at all times. If there are fewer than two designated members then every member is deemed to be a designated member. If membership falls to only one member and the limited liability partnership continues to carry on business for more than 6 months, then it loses the benefits of limited liability.
It is recommended both for business and practical reasons to have an agreement to establish the rights, responsibilities and duties of the partners to each other and outline how the business will be run as there are not many provisions contained within the Act governing these relationships. The agreement sets out a formal agreement between the partners setting out their rights and obligations during the existence of the partnership and also upon it\'s dissolution. The document could specify the investment made by all partners in the business and how the profits will be distributed. A monthly salary can be paid in anticipation of annual profits. You can insert names and details of the partners, the bank account details and limits of bank authority of the partners, the year end accounting date and any specific responsibilities of individual partners. You can specify the decision making rules, holiday arrangements and whether the partners shall work exclusively for the partnership or are allowed outside interests. The agreement is generally called a Members\' Agreement. This agreement does not need to be submitted to Companies House and is not available on public file.
With the consent of the other members, a member may become a designated member at any time. Designated members have the same rights and duties towards the limited liability partnership as any other member. These mutual rights and duties are governed by the limited liability partnership agreement and the general law. However, the law also places extra responsibilities on designated members. In particular, designated members are responsible for the following:
• appointing an auditor (if one is needed);
• signing the accounts on behalf of the members;
• delivering the accounts to the Registrar;
• notifying the Registrar of any membership changes or change to the registered office address or name of the limited liability partnership;
• preparing, signing and delivering an annual return to the Registrar;
• acting on behalf of the limited liability partnership if it is wound up and dissolved.
Designated members are also accountable in law for failing to carry out these legal responsibilities.
Every limited liability partnership must prepare annual accounts that report on the financial performance and position of the limited liability partnership during the year, whether or not the limited liability partnership has been trading or not. If the accounts are delivered late, there is an automatic civil penalty for late filing. This is between £100 and £1,000. In addition, designated members may be prosecuted for not filing certain documents.
Every limited liability partnership must deliver an annual return to Companies House at least once every 12 months. It has 28 days from the date to which the return is made up to do this.
Accounts and annual returns are available on public file.
As of 1 January 2007, whether in hard copy, electronic or any other form - the limited liability partnership must state it\'s name, in legible lettering, on the following:
• all the limited liability partnership\'s business letters;
• all its notices and other official publications;
• all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by, or on behalf of, the limited liability partnership;
• all it\'s bills of parcels, invoices, receipts and letters of credit.