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  • £32.00
    No annual charges
    This package is for UK-residents who want the simplest basic LLP registration offer which comes with the certificate of registration produced electronically & Barclays or HSBC business banking account as a part of this offer.
    The following documents will be sending via e-mail upon the registration of your limited liability partnership (LLP):
    • The certificate of registration;
    • The free & fast-track banking account with HSBC or Barclays (which is optional).
  • £49.99
    No annual charges
    This is the basic LLP incorporation package for UK-residents with additional documents produced electronically & the laminated certificate will be send by post.
    This LLP formation offer includes all services mentioned in the first option, plus:
    • The partnership agreement;
    • The meeting of the board of members;
    • The membership certificates;
    • The partnership' registers;
    • The laminated certificate of registration (will be send by post).
  • £92.99
    No annual charges
    This is one of our the most popular LLP formation packages for the UK residents.
    The third option includes all benefits & items mentioned in the second option, plus the following items will be send by post:
    • Two laminated certificates of registration & LLP' agreements;
    • The first meeting of the board of members, two elegant membership' certificates & the rubber stamp;
    • Two sets of the LLP's registers, the certificate of the beneficial owner; additional services are available.
  • £99.99
    Annual fees from £75.00
    This is our the MOST POPULAR LLP creation packages for such customers who run their business from home, and who are looking to minimise members's liability.
    This LLP formation offer includes all LLP registration benefits & items mentioned into the SECOND OPTION, plus the provision of:
    • The registered office address in London;
    • The government mail forwarding;
    • The secretarial compliance service & the certificate of the registered office address;
    • Additional services are available.
  • £129.99
    Annual fees from £105.00
    This LLP incorporation package for non-UK customers comes with the registered office address in London and the LLP's secretarial compliance service for one year.
    The following items are included in to this offer:
    • The certificate of registration, the LLP agreement;
    • The LLP's registers, two membership' certificates & meeting of the board of members;
    • The registered office address, government mail forwarding & certificate of the registered office address.
  • £479.99
    Annual fees from £455.00
    This is one of the very favourite UK LLP registration packages for non-UK customers, who wish to appoint UK nominee members in order to maintain the anonymity.
    This LLP registration offer includes all services mentioned in the first option, plus the following:
    • The provision of two UK nominee members;
    • The signed power of attorney;
    • The signed, undated resignation letters from nominee members;
    • The agreement for the provision of the nominee service.
  • £829.99
    Annual fees from £805.00
    This is one of the most popular LLP formation packages for non-UK customers, who wish to appoint two offshore based nominee members as an option to the tax planning.
    This LLP setting-up offer includes all services mentioned in the FIRST OPTION, plus the following:
    • The provision of two offshore nominee members & the signed power of attorney;
    • The signed & undated resignation letters from nominee members;
    • The agreement for the provision of the nominee service.
  • £989.99
    Annual fees from £805.00
    This is the MOST OPTIMAL LLP establishment package in the UK market for such non-UK customers, who wish to legalise all corporate documents by a Notary Public and certify them by the Apostille stamp.
    This LLP creation offer includes all services mentioned in the THIRD OPTION, plus:
    • The certification of all LLP documents including the power of attorney by a Notary Public & the final verification of LLP documents by the Apostille.
    • Free LLP common & the attorney in law' rubber stamps.
Dormant LLP
This package includes all needed services for the registration & keeping an LLP partnership dormant for the first year.
Pay £300.00 now
and £350.00 eleven months after.
  • The registration of a partnership (the government fee for the incorporation of a partnership is included).
  • The provision of the registered office address for a dormant LLP at the Baker Street in London.
  • The provision of a nominee secretarial to protect the member(s) responsibility.
  • The initial registration of your partnership as a dormant with the HMRC.
  • We will act as the tax agent with the HMRC for your behalf.
  • The government mail forwarding to your own address in the UK.
  • We will keep your partnership registers at the registered office address.
  • The preparation of the annual return and year-end dormant account and its submission with the Companies Registrar and Inland Revenue.
  • The certificate of incumbency; and
  • The certificate of non-trading (at the end of the year).
  • In the second year of business, you'll need to pay £350.00 only.



LLP Main Characteristics & Benefits: Registration of a Limited Liability Partnership (LLP) - Registering and setting-Up a Limited Liability Partnership in the United Kingdom

Coddan is the UK business entities registration agentCoddan is the UK business entities registration agent and certified accountancy firm with many years' experience in assisting clients with business incorporation in the United Kingdom (England, Wales, Scotland and Northern Ireland), offering in most circumstances the same-day online limited liability partnerships incorporation services for the UK residents & non-UK based customers. Our expert knowledge and extensive experience of setting-up of businesses and Limited Liability Partnership' structures has made us possible to provide the very professional, prompt, and efficient incorporation level of services.

Our team of tax-advisors and incorporation consultants will be pleased to assist with your enquiries related to establishing and maintaining limited liability partnerships or creating complex corporate legal and tax-savings structures. On our web site, you will find a number of useful tips and legal information, downloadable documents, which may help you to learn what to take into consideration when deciding among setting-up LLPs, establishing limited partnerships and create other business structures. Our great value UK LLP formation price starts from just £32.00, we consistently provide quality assistance and the best service to satisfy our valued customers - you will receive the personalised telephone and e-mail help that you really need!

Coddan telephone help lines provide confidential advice, support, and access to pastoral care for business consultants and accountants. Some of our help lines can also be contacted online, by e-mail and by fax. Our team of friendly staff (who are all convincing specialists) is on hand to ensure that your move goes through as smoothly and swiftly as possible.

Confidential advice and support services have been provided from our premises in 124 Baker Street, London. We are committed to providing a comprehensive range of services and ensure that we offer a service that blends professionalism with a friendly, informal approach. By doing so we remove the mystique that sometimes surrounds our profession. We believe that each client has an individual and specific legal requirement and therefore provide a prompt and professional service, which is individually tailored to the particular needs of each client. By doing so, we are able to advise and assist in a clear, direct, and cost effective manner.

LLP Registration Service

We provide fast online service for UK LLP registration, & including a private, public and guarantee companies formation, establish of limited partnership in Scotland, plus the other business entities incorporation in England, Wales, and Scotland.

Setting up a business for the first time can be confusing and there are too many issues to consider. You need to decide whether to use professionals who can help you to incorporate your LLP, and to choose the best ownership structure for your business.

Choosing a structure for your business can be a confusing puzzling of terminologies. However, with this basic guide, you will be able to select the structure that will serve your business best at tax time. There are several types of legitimate commercial and non-commercial legal entities which you can choose to operate as. Find out the links below on the pros and cons of registering your business.


Coddan is one of the leading service providers in the field of English, Scottish, and Irish LLPs, partnerships, private or public companies formation and registration. Our electronic filing software has been approved by Companies House. Companies House (Companies Registry, Secretary of State) is an executive agency of the United Kingdom Government Department of Trade and Industry (DTI). All LLPs in Great Britain are registered with Companies House and file specific details as required by the Companies Act 2006.

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Our business is international - we offer a wide range of legal LLP incorporation services to multinational, public & private clients and entrepreneurs in industries and public actions. Our firm deals with transactions of all sizes and complexity combining global and local expertise on behalf of clients in the United Kingdom, including Northern Ireland, Republic of Ireland, and Isle of Man, & around the world. In addition, we also advise foreign customers on doing business in England, Wales, Scotland, Northern Ireland, Republic of Ireland, Isle of Man and in other offshore countries. We can provide you with a wide range of LLP-related legal advice covering all aspects of the start-up, trading activities and business expansion in the UK and overseas as well as realising value.

We provide different LLP incorporation packages with the different options depending on your business needs; each package offers the complete formation of a limited liability partnership, which is usually ready to commence trading within six to eight hours. Our packages offer the perfect results for those people who are taking the first step into the business or smaller limited liability partnerships whose budget won't stretch to bespoke business solutions, there are no dumbfounds and no hidden charges, - what you see is what you pay!

We can also assist clients with the special needs or requirements, we could make a tailor made package that would suit your personal needs and wants. If you choose us as your LLP incorporation service provider, you will almost immediately realise that our team of proficient advisors, is your own dedicated support team.

Limited liability partnership registration documents submitted electronically, which allows us to offer you a timesaving service and eliminate the necessity to complete the paper forms, sign them by your partnership officers, and certify by a solicitor or notary public. Our services include assisting you on: -

  • Limited liability partnership (LLP) formation and registration;
  • Members (partners) duties, partnership governance and protecting your designated members against liability;
  • Debt and equity funding initially and for on-going expansion;
  • Inward and outward investment, including entry strategy;
  • Supply of goods/services and other commercial contracts;
  • Franchising, distribution, agency and commissionaire agreements;
  • Joint venture, collaborations and strategic alliances (both UK and international); and
  • Implementing an exit or succession strategy to meet your needs.

Our flexible, relationship-based model facilitates our collaborating with you to truly understand your objectives and help you attain them. We tailor our services and approach to meet your needs.

LLP Registration With Companies House: Why Incorporate an LLP With Coddan 

LLP Registration With Companies House: Why Incorporate an LLP With CoddanPersonal service - Coddan retained the high quality advisors who are extremely knowledgeable and true professionals in both of UK and offshore legal LLP structures and tax law aspects. Coddan's advisers can provide customers with free and confidential advice and information on starting up a business in England, Northern Ireland, Scotland, and Wales; and in the Island of Man.

If you would like a personal face-to-face consultation and dedicated help with your UK LLP start-up package or needs, call us on +44 (0) 207.935.5171, or 0330.808.0089 to discuss your requirements and make an appointment with one of our consultants. Our trained business consultant will contact you at a pre-arranged appointment time to discuss your individual circumstances, as well as your suggestions in relation to your LLP registration needs. Our project begins with a short meeting, where our advisors gather the information required to register a limited liability partnership for an each client. The result includes personal assistance with the order form submission, usually completed in four-to-six business hours, an electronic copy of LLP documents and further legal documentation printed on the same day.

If you have questions about legal aspects of your limited liability partnership registration application, you should speak to one of our consultants. We are very happy to provide a practical support, we have a team of professional business advisers and consultants who can support you to strengthen and grow your business. Main reasons to register a limited liability partnership (LLP) with us: -

  • We have the professional knowledge and qualifications;
  • We have the experience;
  • We have been in the business for over 18 years and we intend to stay for much longer;
  • We work in a confidential manner;
  • We are multilingual;
  • We offer a personal approach that is custom-designed to your requirements;
  • We are committed to our clients;
  • We are committed to providing high quality service;
  • We take our compliance and legal obligations seriously;
  • We respond very promptly to all enquiries and problems;
  • We are committed to helping you achieve your objectives.

You will not be left on your own once you have started-up an LLP, we still are here to help you with any problems that you may face as you establish and grow your business. Our advisers will answer any questions you may have and explain what you, or we, might do in your current circumstances. If necessary, you may return to us for further help as matters progress. Our team of full-time professional business advisers can guide you through the essential steps to launching your own business. Please, take a note that we can have meetings with current of positional customers by appointment only. We can help if you need a qualified advice and guidance in any of the following areas: -

  • How to select the best business form;
  • How to start and register your own limited liability partnership in the United Kingdom, Northern Ireland or/and Republic of Ireland;
  • How to get your limited liability partnership (LLP) up and running;
  • How to satisfy to the new legislation and legal requirements prior to register a new limited liability partnership in the UK;
  • Reasons to register a limited liability partnership (LLP);
  • How to establish a limited liability partnership in the United Kingdom, Northern of Ireland, Isle of Man, Cyprus, or in other offshore low-tax countries;
  • How to manage your already established limited liability partnership;
  • How to fulfil the legal requirements and avoid penalties and common mistakes when sending forms and documents to Companies House; etc.

If you do not need an advice or guidance how to register a limited liability partnership, you may simply place an order online with automatic e-mail confirmation, status updates, and e-mail notifications of filing status changes. Areas of our practice: -

  • Determination of the best business structure for tax purposes;
  • Formation of limited liability partnerships and companies;
  • Provision of the registered office addresses service;
  • Provision of the nominee officers (nominee members, nominee designated members/partners);
  • Registration of an LLP as the tax payer;
  • Tax agent or fiscal representative service;
  • VAT registration and VAT management, UK tax representation services;
  • Registering and licensing copyrights, trademarks, design rights and patents;
  • Bookkeeping and preparation of management accounts;
  • Preparation and filling of statutory accounts;
  • Registration as a money service business;
  • Opening bank accounts (we work with several banks in the UK and offshore countries that offer different banking facilities);
  • Voluntary striking-off, dissolution and restoration of limited liability partnerships (LLP) to the register.

Professional UK Registered LLP Taxation Services: Accountancy and Taxation for Your Incorporated LLP 

Professional UK Registered LLP Taxation Services: Accountancy and Taxation for Your Incorporated LLPThe members of the LLP are responsible for preparing the firm annual accounts and, if applicable, consolidated accounts for it and its subsidiaries. The accounts must be approved by the members and signed by a designated member. The accounts, together with the auditor's report where appropriate, must be sent to every member of the LLP and to all the firm's debenture holders (if any) within one month of their being signed, and in any event no later than ten months of the end of the relevant reference period. Partnerships do not pay corporation tax, but rather, the individual partners will pay tax depending on their profit share.

At Coddan, our professionally qualified accountants can prepare and submit all tax returns on your behalf. Minimising tax is a prime financial goal for both businesses and individuals. With the aid of our expert tax advisors' we can help structure a legal and efficient scheme that will reduce the amount of tax you pay. Services offered include: -

  • Personal financial planning;
  • Self-assessment;
  • Inheritance tax planning;
  • Tax efficient structuring of expansion/acquisitions;
  • Tax efficient exit strategies;
  • IHT and trust planning;
  • Residency and offshore planning;
  • Tax investigations;
  • Expatriate taxation;
  • P11D's and P60 preparation;
  • Dealing with HMRC investigations;
  • Preparation of VAT returns;
  • Submission your LLP accounts to the Registrar of Companies within the strict time limits applicable;
  • We can maintain the LLP's statutory books, and complete the limited liability partnership's annual return form and file it with the Registrar of Companies;
  • We can advise and assist you with routine and not so routine matters of LLP administration.

LLP Year End Accounts 

After your year-end date, Coddan can process files on behalf of your company and present them with graphics and industry-specific trend analysis. We offer all of our clients updated and accurate performance data that helps them to make specific business decisions.

LLP Management Accounts 

Management accounts offer an assessment of a limited liability partnership's current financial position. The report is a useful document that enables businesses to analyse the performance, profit and loss of the company, and illustrates any areas they can improve upon.

Forecasting and Budgeting 

An accurate forecast is a fundamental part of formulating successful business expansion. The forecast protects cash flow but the information also provides an invaluable insight into the partnership's full potential, which is then forward to external parties such as banks and shareholders. Coddan's team of experts can help you plan the success of your LLP's future with the help of our advanced structures and business tools. Our fee for completing your individual tax return is made up of two components: -

  • Fixed fee;
  • Time based fee.

In many cases, no further work will be required to complete your tax return.

What is an LLP - The Main UK Limited Liability Partnership' Characteristics 

What is an LLP - The Main UK Limited Liability Partnership' CharacteristicsWhat is a limited liability partnership? Limited liability partnerships were created by the Limited Liability Partnerships Act 2000, and are known as "LLPs". Two or more individuals, corporations, partnerships, trusts, or other entities can join together to engage in business as an LLP.

The owners of an LLP are called "partners". Partners essentially own the LLP much in the same way as partners own a general partnership and shareholders own a corporation. When an LLP engages in business activities, it is the LLP itself which actually owns and operates the business from a legal sense. Limited personal liability of the partners of an LLP means that in most situations the debts and obligations of the business engaged in by the LLP are not the personal responsibility of the partners - the debts and obligations of the business can only be paid from the income and assets of the LLP. Of course, if a business operated by an LLP has financial difficulties, each partner of the LLP could lose the amount of his or her investment in the LLP, as well as the equity built up in the business.

Beyond this, however, no partner risks the loss of his or her other assets and income. As with a company, the LLP will have a registered office, recorded at Companies House. Enforcement will be taken against the LLP as a legal entity in its own right. Members or designated members of the partnership may also be the subject of enforcement as members of a body corporate under s.37(2) HSWA, if their conduct comes within the terms of s.37(1). Care should be taken to determine individual roles and responsibilities, to ensure that any action is being taken against the most appropriate person.

Choosing the entity that best suits your business and personal needs is an important decision and should not be taken lightly. Legal and tax advantages as well as disadvantages exist for each entity. It is strongly suggested that new business owners consult with both a tax accountant and an attorney to aid in making a proper decisions.

Operation of a business as an LLP may not be appropriate for all situations. Careful consideration should always be given to the choice of business organization. The desired financial and managerial relationships among the investors, the potential liabilities of the business, and consequences of various tax treatments are factors which must be considered. We recommend reviewing this site in its entirety, so that you are knowledgeable of the UK jurisdiction and the powers granted to UK LLPs.

We will guide you through the process of registering your limited liability partnership and establishing your registered identity. Complete and submit application form. Adequate completion and submission of this form, along with the provision of payment, will enable Coddan to incorporate your proposed LLP within five business days.

United Kingdom Limited Liability Partnership: Introduction

United Kingdom Limited Liability Partnership: IntroductionFrom 6th April 2001 it will be possible to register UK limited liability partnerships (LLPs) at Companies House. This new business entity, which will combine limited liability, corporate personality and the advantages of partnership taxation, may prove attractive not only to the professions but also to many other businesses. Limited liability partnership is a body corporate (with legal personality separate from that of its members) which is formed by being incorporated under the Limited Liability Partnerships Act 2000; and a limited liability partnerships has unlimited capacity.

The members of a limited liability partnerships have such liability to contribute to its assets in the event of its being wound up as is provided for by virtue of the Limited Liability Partnerships Act.

For a limited liability partnerships to be incorporated: two or more persons associated for carrying on a lawful business with a view to profit must have subscribed their names to an incorporation document, there must have been delivered to the registrar either the incorporation document or a copy authenticated in a manner approved by him, and there must have been so delivered a statement in a form approved by the registrar, made by either a solicitor engaged in the formation of the Limited Liability Partnership or anyone who subscribed his name to the incorporation document.

The incorporation document must be in a form approved by the registrar (or as near to such a form as circumstances allow), state the name of the limited liability partnerships, state whether the registered office of the limited liability partnerships is to be situated in England and Wales, in Wales or in Scotland, state the address of that registered office, state the name and address of each of the persons who are to be members of the limited liability partnerships on incorporation, and either specify which of those persons are to be designated members or state that every person who from time to time is a member of the limited liability partnerships is a designated member.

The profits of the business of an LLP will be taxed as if the business were carried on by partners in partnership, rather than by a body corporate. This ensures that the commercial choice between using an LLP or a partnership is a tax neutral one. The taxation clauses in the Act are expressed in broad terms so that the existing rules for partnerships and partners will, in general, simply apply to LLPs, and members of UK LLPs, which are carrying on businesses, as if these were partnerships and partners respectively.

The transfer of an existing business to an LLP will only be treated for tax purposes as giving rise to a cessation of the business of the partnership which is making the transfer if in otherwise identical circumstances a transfer between one partnership and another would do so. The transfer of assets between a partnership and an LLP will only give rise to chargeable gain or capital allowance consequences if, in otherwise identical circumstances, a transfer of assets between one partnership and another would so do. Similarly, Inland Revenue Statements of Practice and Extra Statutory Concessions will apply to LLPs and members of LLPs as they apply to partnerships and to partners.

Register an LLP - Current Situation

The final draft of The Limited Liability Partnerships Regulations 2001 have now been laid before Parliament and published by the Stationery Office. In their December 2000 Tax Bulletin (issue 50) the Inland Revenue set out their views on how members of an LLP which carries on a trade or profession will be taxed. This contains much useful information and can be accessed at (www.inlandrevenue.gov.uk/bulletins/tb50.htm). However, it specifically states that it "does not cover the detailed tax treatment of investment businesses for which the LLP structure was not originally intended". Therefore the Revenue appear to be signalling that the tax treatment for investment LLPs will not be as favourable.

British Limited Liabilities Partnerships Main Characteristics

British Limited Liabilities Partnerships Main CharacteristicsAn English LLP registered at Companies House will receive a certificate of incorporation, like a company. It will be a corporate body and will be required to file certain information at Companies House. However, it will not have share capital and will be organised and taxed like a partnership. An agreement, which will not be publicly filed, will be a practical necessity.

In addition, all business letters and order forms must show the following: limited liability; body corporate; taxed as a partnership; organisational flexibility of a partnership; partnership agreement (if any) confidential to members; accounts preparation and filing requirements broadly as for a company; ability to create floating charges. The ability to create a corporate body with limited liability which at the same time will be taxed (and largely organised) as if it were a partnership is a strong combination for the right circumstances.

Those setting up a new business may wish to consider an LLP as an alternative. Many existing partnerships may also wish to consider whether the LLP will be suitable for them. There will be stamp duty relief on the instrument transferring property from an existing partnership to a newly incorporated LLP if relevant conditions are met. Interestingly, there is no minimum amount for contribution by members in a winding up. However, there are detailed provisions designed to prevent members siphoning off funds in the event of insolvency. Parts of the Insolvency Act 1986 will apply.

Limited Liability Partnership Membership

On the incorporation of a British limited liability partnership its members are the persons who subscribed their names to the incorporation document (other than any who have died or been dissolved). Any other person may become a member of a Limited Liability Partnership by and in accordance with an agreement with the existing members. A person may cease to be a member of a limited liability partnership (as well as by death or dissolution) in accordance with an agreement with the other members or, in the absence of agreement with the other members as to cessation of membership, by giving reasonable notice to the other members.

A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership.

United Kingdom LLP Members as Agents

Every member of an LLP is the agent of the limited liability partnership. But a limited liability partnership is not bound by anything done by a member in dealing with a person if the member in fact has no authority to act for the limited liability partnership by doing that thing, and the person knows that he has no authority or does not know or believe him to be a member of the UK limited liability partnership.

Where a person has ceased to be a member of a limited liability partnership , the former member is to be regarded (in relation to any person dealing with the limited liability partnership) as still being a member of the limited liability partnership unless the person has notice that the former member has ceased to be a member of the LLP, or notice that the former member has ceased to be a member of the limited liability partnership has been delivered to the registrar.

Where a member of a limited liability partnership is liable to any person (other than another member of the limited liability partnership ) as a result of a wrongful act or omission of his in the course of the business of the limited liability partnership or with its authority, the limited liability partnership is liable to the same extent as the member.

Designated Members 

If the incorporation document specifies who are to be designated members any member may become a designated member by and in accordance with an LLP agreement with the other members, and a member may cease to be a designated member in accordance with an agreement with the other members. But if there would otherwise be no designated members, or only one, every member is a designated member.

If the incorporation document states that every person who from time to time is a member of the limited liability partnership is a designated member, every member is a designated member. A limited liability partnership may at any time deliver to the registrar: notice that specified members are to be designated members, or notice that every person who from time to time is a member of the limited liability partnership is a designated member. A notice shall be in a form approved by the registrar, and shall be signed by a designated member of the UK limited liability partnership or authenticated in a manner approved by the registrar. A person ceases to be a designated member if he ceases to be a member.

Choosing an Limited Liability Partnership Status

Choosing an Limited Liability Partnership StatusLimited liability partnerships (LLPs) can provide an ideal structure for numerous businesses - not simply professional practices as is a common misconception. The only activities that cannot adopt LLP status are those that are unlawful, not intended to be profitable and which do not constitute the carrying on of a trade, profession or occupation. So, if you're contemplating setting up in business or reconsidering the structure of an existing business, an LLP could be an option worth investigating. For professional service partnerships, conversion to LLPs may offer an attractive prospect at the moment as the number of negligence claims against professional firms are increasing, and as a result professional indemnity (PI) cover is becoming more expensive.

Unlike a standard partnership, an LLP is a corporate body with the ability to contract in its own right. The partners - known as members - are not put at risk by the negligent acts of their fellow members and their liability is limited to the amount they agree to contribute upon a winding up. For most tax purposes, however, the corporate status is ignored and members can essentially enjoy the same Income Tax, National Insurance and Capital Gains Tax treatment as partners in a general partnership.

Such advantages do not come without effort - there are registration and filing requirements that need to be adhered to. However, for many businesses LLPs offer an excellent halfway house between an unincorporated business and a company. LLPs are, technically, corporate bodies. This means they offer several commercial advantages over ordinary partnerships. Their corporate status gives them added credibility among customers and suppliers and they can find it easier to borrow because they can give the bank a floating charge over their assets - something ordinary partnerships cannot do.

When limited liability is factored in, but with the flexibility to operate day to day like an ordinary partnership (no Annual General Meetings and the related paraphernalia associated with limited companies), LLPs are suddenly a pretty serious proposition for the smaller business. Another consideration is that LLPs, like limited companies, have to make their annual accounts public by filing them at Companies House. For some businesses, this is actually an advantage - although for others it's a "showstopper".

LLPs are also being used increasingly by companies undertaking joint ventures, as they offer the benefits of limited liability without the disadvantages of having an subsidiary company. An LLP is a flexible vehicle that should at least be considered for every business start-up; every joint venture; every professional practice; every business with chargeable assets and for collective investment arrangements.

Limited Liability Partnership Charges

If an LLP creates a mortgage or charge over its property this will require registration at Companies House within 21 days of its creation if it covers certain types of property such as land or buildings or book debts or if it is a floating charge. The original mortgage or charge document must be submitted to Companies House along with the relevant form. If a charge is not registered in time it will be void against the liquidator or administrator of the LLP or against any of its creditors. Late registration is only permitted with the sanction of a court order.

An LLP is required to keep a register of charges at its registered office and to enter in this details of all charges created (this applies even to charges that are not registrable at Companies House). It must also keep available for inspection by any member or creditor of the LLP copies of any charge instruments relative to charges it has created that are incorporated at Companies House. If a registered charge is satisfied, Form LLP 403 (a) or LLP 403 (b) (declaration of satisfaction) may be submitted to the Registrar in order that the register of charges may be updated. Special provisions apply to mortgages and charges created by Scottish LLPs.

Incorporate an LLP: Partnership Agreement & Financial Issues

All the financial issues below should be taken into consideration in a partnership agreement.

LLP Capital Investment 

The agreement should state how much financial input each partner is have. Capital investment from each partner is how the business will finance itself and purchase the assets needed to run the business.

LLP Income and Share of Profits 

LLP Income and Share of ProfitsYou will need to consider how much, if any, each partner will take from the business as a salary. This will be before profits are distributed and can be used to reflect the different roles and work input of each partner. Also, you may wish to award partners' interest on their capital contributions. This can be paid before profits are distributed to reflect any differences in capital investment. Unless expressly agreed, the Partnership Act states that each partner will share profits equally.

If you want to share profits in different ratios, for example, to reflect seniority, then this will have to be expressly stated. You will also need to address the issue of how any losses will be shared.


Withdrawals 

A potential source of disagreement between partners is the amount of money each is entitled to draw from the business. Some may wish to store a higher percentage of profits in the business to maintain a healthy balance, whilst other partners may want to withdraw their share of the profits immediately. It is important, therefore, to agree on a limit on drawings, for example, a set monthly amount.

Shares in Asset Value Changes 

In the situation where a fixed asset of the firm, such as a warehouse, is sold at a profit, how is this profit to be shared? Under the Partnership Act this will be in equal proportions unless stated otherwise. It may be important, therefore, to expressly agree on what is to be done in this situation if this profit is not to be shared equally.

Ownership of Business Assets 

The business may acquire assets during its life, partners may allow the business to use assets that they own or a partner may use the value of one of their own assets to represent their capital investment in the business. It is; therefore, important to stipulate which are the partnership's assets and which belong to an individual partner. Disagreement over the ownership of assets may occur when dissolving the partnership.

If the partnership is likely to prove quite complicated or there are substantial amounts of money or assets involved, you should seek advice from a solicitor. The above information, however, will help you be informed about the most important issues and enable you to consider relevant matters with your other partners.

Partnership Agreement Operational Issues

All the operational issues below should be taken into consideration in a Partnership Agreement.

Degree of Commitment 

It is important to consider how much work each partner is to do in the business. For example, a 'sleeping partner' whose involvement is purely financial, will not want to be required to take part in the daily running of the business. In addition, some partners may want to work part time whilst others are to work full time. The Partnership Act will imply that each partner has the right to take part in the daily management of the business unless stated to the contrary. An agreement should set out, therefore, the degree of commitment of each partner. For a full time working partner this may be expressed as 'devoting his/her whole time and attention to the business.

Sickness, Absence and Holidays 

When considering the degree of commitment that the partners are to have, you should address the issue of absence from the business. It is important to consider what will happen, for example, when a partner needs maternity leave or is suffering from long-term incapacity. You will have to qualify the duty of any full time partner to devote all his/her time and attention to the business with whatever is decided on about time off for holidays, sickness or other absenteeism.

Roles of an LLP' Members 

It is important to state the different functions each partner is to have within the firm and the extent of their authority. For example, one partner may be in charge of sales whilst another is in charge of purchasing. The agreement might state that a particular partner only has a set amount of authority, for example, to enter into contracts less than £10,000.00 in value, or alternatively, that a partner has authority to do whatever they feel is in the best interests of the business within their area. Any partner ignoring a restriction or the scope of their role may be liable for breach of contract.

LLP & Decision-Making 

LLP & Decision-MakingUnless otherwise agreed, all partnership decisions will be made on a majority basis by one partner one vote. However, if it is a decision on changing the nature of the business or the introduction of a new partner, then every partner must agree. It may well be, therefore, that this is not what partners in a particular business want. For example, it may be a good idea to state that certain decisions can be made by one partner alone, such as buying stock, other decisions require a majority vote, such as employing staff, whilst others require the consent of all the partners, such as buying new premises.

If the partnership is likely to prove quite complicated or there are substantial amounts of money or assets involved, you should seek advice from a solicitor. The above information, however, will help you be informed about the most important issues and enable you to consider relevant matters with your other partners.

LLP Partnership Agreement Termination Issues

All the term and termination issues below should be taken into consideration in a partnership agreement.

LLP Duration 

The Partnership Act provides that unless agreed to the contrary, any partner can terminate the partnership at any time by giving notice to the others. This notice will take effect immediately and does not have to be in writing. This means that a partnership can seem very insecure and uncertain if a particular duration for it is not agreed on.

There are a number of ways of giving a partnership more security. Firstly, you can put a clause in the agreement stating that a partner must give a set period of notice before ending the partnership. A period of 6 months or more, for example, would allow the partnership time to find a new partner. Alternatively, you can agree that the partnership is to last for a fixed term during which it cannot be ended by one of the partners. Once the period has ended it could then continue on the same terms, but could be terminated by a partner giving a period of notice.

Lastly, you could provide that the partnership is to continue for as long as there are at least two partners in the firm. This would allow partners to leave without requiring the business to end. You should also consider the possibility of a partner dying or becoming bankrupt. The Partnership Act says that if this happens then the partnership will end. It is worthwhile, therefore, to consider a clause that the partnership will continue in this situation, as long as the other partners can pay for the deceased's or bankrupt's share of the business.

Expulsion 

In certain circumstances, the partners in a business may feel it necessary to expel a particular partner. This may be because he/she has broken the partnership agreement, for example, by not devoting enough time to the business. If this issue is not addressed in the partnership agreement, then the law says that the only way to expel a partner is to dissolve the business. An agreement should, therefore, set out in what circumstances a partner can be expelled, how the decision to expel is to be made (majority vote or all remaining partners in favour) and state that the partnership is to continue without him/her. You will also have to deal with payment of the expelled partners share of the business.

Paying For an Outgoing Partners Share 

When a partner leaves a business whether through death, expulsion or retirement and that business is to continue, the outgoing partner must receive payment from the others for his/her share. The terms of this payment should, therefore, be agreed in advance.

It is important to consider: whether the other partners have to buy the other partners' share or whether it is an option to buy. When the partner is to receive payment, for example, immediately, after a set period of time or by instalments. How the share of the business is to be valued, for example, by a named professional or by an agreed formula by the partners.

Restrictive Covenants 

An outgoing partner will be free to set up a competing business or to work for a competitor unless a restraint of trade clause is inserted into an agreement.

In order to be legal, such a clause must: seek to protect a legitimate interest. This is normally the firm's business links and confidential information. Be reasonable in terms of duration and geographical area. If the clause is unnecessarily restrictive and would deprive an outgoing partner of a living for a lengthy period, then it will not be enforceable. The area must not be very wide, for example, it should be limited to the area in which the firm actually did business and not prevent a former partner from working elsewhere.

It must also be limited to the kind of business that the partnership operated in, for example, it cannot prevent a former partner from finding employment in a different trade. Anything longer than 12 months may also prove quite difficult to enforce. If the partnership is likely to prove quite complicated or there are substantial amounts of money or assets involved, you should seek advice from a solicitor. The above information, however, will help you be informed about the most important issues and enable you to consider relevant matters with your other partners.

Number of Partners

A partnership, whether limited or not, may not normally consist of more than 20 persons. However, under Companies Act there are a number of exceptions to this rule, including: a partnership carrying on practice as solicitors and consisting of persons each of whom is a solicitor. A partnership carrying on practice as accountants where the partnership is eligible for appointment as a company auditor. A partnership carrying on business as members of a recognised stock exchange and consisting of persons each of whom is a member of that exchange.

A partnership carrying on business as surveyors, auctioneers, valuers, estate agents, land agents, or estate managers and consisting of persons of whom at least three-quarters are members of the Royal Institute of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers and of whom not more than one-quarter are limited partners. Partnership carrying on business as insurance brokers and consisting of persons each of whom is a registered insurance broker or an enrolled body corporate. For the meaning of "registered insurance broker" and "enrolled body corporate" see Section 29(1) of the Insurance Brokers (Registration) Act 1977.

LLP Taxation and National Insurance Contribution

LLP Taxation and National Insurance ContributionPartners are considered as self-employed for tax purposes. Partnerships do not pay corporation tax. Because of this, you will be responsible for your own tax and National Insurance and will therefore be required to register with the Inland Revenue. You are required to register with the Inland Revenue as self-employed within 3 months of starting a new business. Failure to do so may make you liable to pay £100.00. If you do not register and are not paying tax, you will breaking the law and could be liable to further penalties.

Registration is achieved by completing and sending to the IR form CWF1. This form registers you for paying flat rate Class 2 National Insurance contributions. The weekly flat rate is £2.40 p.w. You should fill in the Class 2 contributions Direct Debit application form. In the April after your business starts (financial year is from 6th April to the following 5th April) the Inland Revenue will send you a self-assessment tax return to fill in.

This will be used to assess any profit -related Class 4 NI contributions that you may need to pay. After your first year in business the IR will ask you to make "payments on account" - to pay most of your income tax and some of your Class 4 NI contributions in advance. The amount requested is based on the prior year's earnings with payments due on 31st January and 31st July. If your profits are down you can request to reduce these payments.

United Kingdom Stationery, Accounts & Records

The Business Names Act 1985 requires all businesses trading under names other than those of their owners to display their owners' names and an address at which documents can be served. This information must be displayed both at business premises and on business stationery. It must also be supplied in writing at the request of any person with whom you are doing business. Where the partnership consists of more than 20 persons certain exceptions apply to the business stationery requirements.

As a partnership, you must keep the following records: the purchase ledger; the sales ledger; the cash book; the creditors & debtors control ledger. Partnerships will need to prepare the following accounts: the balance sheet; the profit and loss account. Profits that are shared out in accordance to the partnership agreement must be shown in the profit and loss account. The partnership accounts must be prepared within a period of 10 months after the end of the financial year. The accounts may cover any period up to 18 months which may be specified in the partnership agreement.

If a period is not specified in the agreement, the partnership accounts must be drawn up for each 12-month period ending on 31st March in each year. After your first year in business the IR will ask you to make "payments on account" - to pay most of your income tax and some of your Class 4 NI contributions in advance. The amount requested is based on the prior year's earnings with payments due on 31st January and 31st July. If your profits are down you can request to reduce these payments.

Limited Liability Partnership Accounts & Audit

The accounting and audit requirements for limited liability partnerships will be similar to those applied to companies. They will include financial disclosure for third parties dealing with the LLP and disclosure of earnings of the highest paid member. Although all limited liability partnerships (LLPs) have to submit some form of accounts to Companies House, these accounts don't have to be audited for financial years starting before 6 April 2008 or prior to 1 October 2008 for LLPs if you: -

  • Qualify as a small LLP for the purposes of filing abbreviated accounts;
  • Have a turnover of no more than £5.6 million;
  • Have a balance sheet total of no more than £2.8 million.

For financial years starting on or after 6 April 2008, to qualify for total audit exemption, a company must: -

  • Qualify as a small LLP;
  • Have a turnover of no more than £6.5 million;
  • Have a balance sheet total of no more than £3.26 million.

Small and medium-sized LLPs can take advantage of the higher thresholds for accounting periods starting on or after 1 October 2008. In these cases you can submit audited accounts if you wish, but it's not compulsory. Bear in mind there can be drawbacks. Banks, credit managers and your customers and suppliers rely on information from Companies House to assess creditworthiness and will be reassured by an independent audit. If you decide to submit audited accounts, you must appoint an auditor.

Even if a small LLP meets the criteria, it must still have its accounts audited if any of the following ask for an audit: -

  • A member or members holding at least 10 per cent of the value of issued share capital or 10 per cent of any class of shares;
  • In the case of a company limited by guarantee - 10 per cent of its members in number.

Recent changes to the rules have allowed some small financial services businesses and some small businesses, such as home-finance providers, that comply with Sharia law to qualify for an audit exemption. However, businesses taking advantage of the audit exemption should be aware that shareholders who own 10 per cent or more of the company still have the right to ask for an audit.

Limited Liability Partnership Insolvency & Winding Up

The major corporate insolvency and winding up procedures contained in the Insolvency Act 1986 will apply to limited liability partnerships. This will include a provision granting the court discretion to order repayment of any withdrawals made by a member of an LLP within the 2 years prior to winding up. This will only in the event that the member knew or ought to have concluded that after such a withdrawal there was no reasonable prospect that the LLP would avoid going into insolvent liquidation. The limited liability partnership and its members may also be subject to statutory investigation and to penalties for wrongful and fraudulent trading.

United Kingdom Limited Liability Partnership Taxation

LLPs will be taxed as though they were partnerships. Provisions in the LLP Act ensure that the transfer of assets from an existing partnership to an limited liability partnership will be tax neutral. Limited liability partnerships that do not carry on business as a trade or profession such as an investment company will be subject to corporation tax.

Limited Liability Partnership Annual Return

Every limited liability partnership must deliver an annual return to Companies House within 28 days of its made-up date. A limited liability partnership's designated members are responsible for ensuring that the annual return: is delivered to Companies House within 28 days after the anniversary of incorporation or the anniversary of the made-up date of the last annual return; and gives a true picture of the membership of the limited liability partnership at the made-up date.

NB: It is a criminal offence not to deliver the limited liability partnership's annual return within 28 days of the made-up date, for which designated members may be prosecuted.

Limited Liability Partnership Accounts & Accounting Preference Dates

Every limited liability partnership must prepare annual accounts that report on the financial performance and position of the limited liability partnership during the year. The period reported on in the accounts is called the financial year. This starts on the day after the previous financial year ended or, in the case of a new limited liability partnership, on the day of incorporation. Another term for a "financial year" is an "accounting reference period" (ARD). For all new limited liability partnerships, the first accounting reference period is automatically set as the first anniversary of the last day in the month in which the limited liability partnership was incorporated. For example, if the limited liability partnership was incorporated on 10 June 2001 its ARD would be set at 30 June, and the first accounts would cover a period from 10 June 2001 to 30 June 2002 - or up to seven days either side of that date.

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