How To Register a Limited Liability Partnership (LLP) in the UK
- Modified: 29 August 2024
- 4 min read
- Starting a Company
Melissa Yeo
Business Writer
With eight years of writing experience, Melissa is an expert in telling stories that make a difference for small business owners and entrepreneurs. Her background in content and social media spans a range of industries, including publishing, ecommerce and marketing. Here at Osome, you'll find her making everything running a business less intimidating. From specific accounting and bookkeeping advice to insights for company growth, her articles are about helping you to take the next step on your entrepreneurship journey.
So, you’ve got a brilliant business idea, completed your market research, have a business plan and cashflow forecast in hand - you’re ready to start a business. But which company structure should you choose?
You will have heard of creating a limited company, even offshore companies, franchises, and cooperatives, but have you considered a limited liability partnership? This guide will take you through how to register online or by post, the rules you need to consider when naming your business, tax liabilities, the responsibilities and more.
What Is a Limited Liability Partnership?
A limited liability partnership (LLP) is a business structure consisting of professionals, such as doctors, architects, or solicitors, who operate with limited business liability while functioning as a general partnership. According to Companies House, an LLP “protects its members’ assets, limiting their liability to however much they have invested in the business and any personal guarantees they may have given when raising loans”.
An LLP is made up of ‘members’ or ‘partners’ rather than directors and shareholders. These organisations are taxed as partnerships and are not liable for Corporation Tax. Unlike a limited company, which has directors and shareholders and is subject to Corporation Tax, an LLP can be based anywhere in the world. The process of forming an LLP involves registering with Companies House, providing member details, and a registered office address.
If you're interested in setting up an LLP or any other type of business structure, consider our company registration services for professional assistance.
What You Need To Know To Register New LLP
To register an LLP, you need to fill out a Companies House LL IN01 form and send it by post. Alternatively, you can register online via a dedicated service from a company formation agent, like Osome.
The details you need to supply include:
- An LLP name
- The registered office address
- Information about at least two members
- An agreement that details how it will be run
This information will be on the public record. Bear in mind that the requirements for registering private limited companies and ordinary partnerships are different.
Membership in Limited Liability Partnerships
You need two or more people to incorporate. Two of them must be ‘designated’. If there are any dissolved designated members, it is essential to replace them promptly and to notify Companies House to ensure compliance with legal requirements.
A ‘designated’ member has more duties and legal responsibilities than an ordinary member. Their role is to ensure that the organisation and the people that are part of it comply with the LLP Act 2000, the LLP Regulations 2001 and any other relevant regulations.
How many members should you have?
At least two. There is no upper limit for LLP, but remember that two of them must be designated members. LLP members can be:
- Individuals over the age of 16
- Companies (called ‘corporate members’)
- Of any nationality and country of residence
Certain people are prohibited from becoming members, including anyone disqualified from acting as a company director and anyone with undischarged bankruptcy.
The rights and responsibilities
All members must be registered with Companies House. They can be based anywhere in the world. They are required to meet their legal responsibilities as set out in the agreement. This sets out:
- How profits are shared
- Who needs to agree decisions
- Their responsibilities
- How they can join or leave
They must all be incorporated for HMRC Self Assessment.
The responsibilities of designated members
Designated members have more responsibilities than ordinary members. They must:
- Register themselves and the business for HMRC Self Assessment
- Incorporate the company for VAT if sales are expected to exceed £90,000 a year
- Appoint an auditor
- Keep accounting records
- Prepare, sign and send annual accounts and a confirmation statement to Companies House
Changes to member details or status
Designated members are required to inform Companies House about any changes to details, such as their name or status within the company. You can do this by using Companies House’s online service, or by downloading and filling out either a member’s or corporate member’s change of details form to send by post.
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Where To Register Your LLP and Get Help
To incorporate an LLP, you must register it with Companies House, which will provide you with a company registration number and certificate. You’ll need to provide a registered office address and a service address as part of the registration process.
It can be helpful to seek professional advice on the process, whether from Osome or an accountant or solicitor, who can also help you draw up an agreement. Dedicated application services can help you submit your documents, taking the whole process off your plate.
Agreement of Partnership
It’s common to set out an agreement of partnership, also known as an LLP agreement, partnership agreement or members’ agreement.
It’s a legally binding contract made between members, outlining the rights, duties, responsibilities and liability, including how business debts are to be handled. It also sets out how the partnership will be managed and run. Its purpose is to ensure fairness and protect people’s interests and investment.
Choosing the Name of Your LLP
There are several rules to consider when choosing an LLP name. Ensure it’s not the same as or too similar to that of any existing company. However, there is an exception: if the existing company or LLP is within the same group as your LLP, they must give their consent for you to use the proposed name. You can check whether a business name has already been registered via the Company Name Check Tool.
Remember that the name has to feature ‘LLP’ at the end and ensure it doesn’t contain offensive words or anything that would connect it to the government.
Tax Payments for an LLP
An LLP as an entity isn’t taxable, so you don’t have to file a Corporate Tax return on its behalf. However, its members are liable for tax. They pay Income Tax via Self Assessment on the value of the profits they’ve received.
Note that any corporate members, including limited companies, are also liable for Corporation Tax rather than Income Tax.
With eight years of writing experience, Melissa is an expert in telling stories that make a difference for small business owners and entrepreneurs. Her background in content and social media spans a range of industries, including publishing, ecommerce and marketing. Here at Osome, you'll find her making everything running a business less intimidating. From specific accounting and bookkeeping advice to insights for company growth, her articles are about helping you to take the next step on your entrepreneurship journey.
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FAQ
Does an LLP differ from a Limited Company?
Yes, they differ in structure, the way they share profits and the way they are taxed. The structure can’t be used by non-profit organisations and you need two people to set one up, whereas a limited company only requires one and can be used by not-for-profits.
Who can register a new LLP?
Any two people can set up an LLP if they intend to make profit with it. Note that a person encompasses individuals, as well as companies and firms if they are incorporated. You can register yourself by post or online, or through an agent.
How do I register a new LLP?
Either you or an agent can apply through approved software or by post. To register by post, download and fill out the Companies House LL IN01 form. To register online, use third-party software or a formation agent.
Are there any rules on LLP names?
Yes. You can’t choose a name that suggests you’re connected with the UK Government. The name can’t be similar to that of any other organisation. It can’t contain offensive words. It must have ‘LLP’ or ‘limited liability partnership’ on the end.
How long does it normally take to register an LLP?
Online registration may only take 3-4 hours. It depends on how many applications Companies House is processing, so start early in the day. Postal registrations take around 2 weeks.
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