A limited liability partnership (LLP) is an alternative legal structure to the traditional partnership model and is governed by the Limited Liability Partnerships Act 2000.
An LLP is much the same as a traditional partnership as far as tax liabilities, structures and profit sharing arrangements are concerned. Where it differs is that individual partners cannot normally be held liable for the company’s debts. Instead, except in some rare circumstances, their liability is limited to the amount of money they have invested in the business.
Initially favoured by professional firms, it is a suitable model for many businesses who want to combine the benefits of limited liability with the flexibility of a traditional partnership.
Many traditional partnerships have chosen to incorporate, with a large number choosing to become LLPs. However, it is a move that needs to be considered carefully and may not be suitable for all businesses.
Unlike the traditional partnership, members of the LLP do not have employment contracts or hold shares in the business. Instead, their terms and conditions are set out in a member’s agreement. A good agreement will cover arrangements for partners leaving or joining the business, profit sharing and will make clear the rights and obligations of all the partners.
Additional requirements are that an LLP must have at least two designated members who will take on additional administrative duties concerned with the running of the business. Also, the business must have a registered address and it must be registered with Companies House.
If you are considering setting up an LLP or converting to an LLP from an existing partnership our team works across a range of specialisms and can offer expert legal advice for partners and partnerships in a range of business situations.
Our Property team can help you with leases and transfers of title. You may also need advice on mortgages and debentures which funders may require over the assets of the LLP.
A move from partnership to LLP is actually a business transfer. The employment aspects fall under the Transfer of Undertakings (Protection of Employment) Regulations 1981. Our employment team can assist you in ensuring compliance with sometimes complicated legislation.
How we can help
We can also help with:
- Terms and conditions of business
- Website statutory disclosures
- Debt recovery
- Succession planning – Wills and probate
- Succession planning – Tax and trusts
- Leases and property
Atherton Godfrey is a member of Lawyers for Your Business, an innovative legal support scheme operated by the Law Society.
If you would like guidance on converting to a limited liability partnership, on drawing up a member agreement, or on any business related issue, please contact our team today.