Should I Run My Business As A Limited Liability Partnership?

If you are looking to set-up a new business or change the structure of your business, you may want to speak to our corporate solicitors in Peterborough. We are specialists in helping business owners create the right business structure for them. In this blog post our corporate lawyers look at why you may run your business as a limited liability partnership.

What is a Limited Liability Partnership?

The Limited Liability Partnership business structure, also known as LLP, was introduced in 2001 by the Limited Liability Partnership Act 2000. Many of the features of an LLP business structure match those of a traditional partnership structure. This is especially the case in terms of tax liability, internal management and the distribution of profits for example. However, the main difference is that it limits the liability of each partner.

Professionals like lawyers, dentists and accountants will typically run their business as a limited liability partnership.

The Advantages of an LLP

There are three main advantages of running your business as a Limited Liability Partnership. Firstly, the LLP is deemed to be a separate entity that can enter into contracts, buy property or borrow money. This limits the liability of each partner. Running an LLP means that you still have the flexibility of a traditional partnership. This is because the operation of the business and sharing of the profits can still be determined by the Partnership Agreement. You can also protect the name of your LLP because it is registered with the Companies House.

The Disadvantages of an LLP

However, there are some disadvantages that you need to be aware of when running your business as a Limited Liability Partnership. For example, financial accounts must be submitted to Companies House. This must be done on an annual basis, and they can be viewed by the public. All income is personal and taxed accordingly. This could mean that you will pay higher tax than if you were running the business as a registered company. Your LLP must also have at least 2 members. This means that is one person leaves then the partnership may need to be dissolved.

Need help choosing the best structure for your business and setting it up legally so you are protected? Call our experienced business structure corporate solicitors now.