Limited liability partnerships or LLPs as they are sometimes abbreviated are frequently set-up to operate as accountancy, solicitors, surveyors and other types of similar businesses.
Incorporating a limited liability partnership is seen as a hybrid between setting up a company and forming a traditional partnership as LLPs consist of attributes which belong to both.
Limited liability partnerships do not have constitutions provided to them upon incorporation in the same way companies have with their memorandum and articles of association.
LLPs are typically governed by a partnership agreement which depicts their operating procedures, profit distribution, voting structure and other aspects of their existence.
Most partnership agreements are specific to a particular LLP and although templates are frequently used as a basis, tailoring any standard agreement is normally a prerequisite to enacting a meaningful structure and charter.
LLPs enjoy the benefits of limited liability which is common among UK companies and acts as a legal barrier between the trading business and the partners who own and administer operations.
It is predominantly this factor which might encourage two or more individuals to set-up a limited liability partnership instead of an unincorporated business which would not feature this protection of their personal assets.
Again similar to setting up a UK company, LLPs are set-up and registered at Companies House and are allotted an incorporation number at their inception. They also complete and file annual returns and statutory accounts with are viewable on the public register.
The publishing of accounts information is sometimes seen as a disadvantage of limited liability partnerships as their unincorporated counterparts do not have this requirement to share their financial details with the wider world.
The taxation of limited liability partnerships is distinct from that which applied to UK companies. They are not subject to corporation tax but rather the individual partners must account for their allotted portions of income on a personal basis.
This feature bears more similarities to traditional partnerships than to limited companies in this respect.
