Limited Liability Partnership: Hello friends, How are you all. I hope your day’s are going well. Today I am welcomes you all an educational topic. Yes guys today’s topic is Limited Liability Partnership. If you want to know more about this topic then continue reading this article till end.
Meaning Of Limited Liability Partnership
Limited Liability Partnership is also known as LLP. A limited liability partnership (LLP) is a legal business. Professional people such as accountants mostly choose to set up LLP but this business is also choose by other people. LLP is different from ‘traditional’ business partnerships as well as from the limited company structure. These are regulated by various legislation including the Limited Liability Partnership Regulations, 2001.
Structure of LLP
A Limited Liability Partnership is a separate legal entity from its members (partners) which means members or partners are liable only for the amount of money they invest in LLP and any personal guarantees. Members are not liable in spite of these loses whether company may go entirely on loss. This partnership is incorporated at Companies House and it can only be used by profit-making businesses. There is no restriction on the maximum number of partners allowed in it but there is a limit on minimum partners. LLP must requires at least two members on incorporation, either individuals or limited companies. It is also possible to set up a LLP with one individual and a dormant company.
Differences Between Limited Liability Partnership And Other Business Structures
Traditional partnerships do not receive the same protection as LLP receives and in those partnership partners are personally liable for debts incurred by the business if it is not incorporated into a LLP. In addition to this, clients engage in business with the partners individually and not as partnership entity. Although LLP and limited companies looks like similar at first glance but there are lots of differences between these two. These are as follows-
1) A limited company can be setup by one person and that person fulfill the role of shareholder and director but a limited liability partnership requires at least two ‘designated’ members who take responsibility for statutory filing and other legal requirements. There are unlimited number of ‘ordinary’ members.
2) Limited companies pay corporation tax whereas members of LLP pay income tax through self-assessment.
3) The internal structure of a limited company is not flexible on the other hand LLP is flexible. It can be changed by its members.
4) Limited companies have right to sell shares to secure capital investment, but LLP do not have shares.
Advantages Of Forming a LLP
Forming a LLP offer lots of advantages which includes-
1) The first advantage that LLP offer is Protection of personal assets via limited liability
2) Secondly it offers flexibility in terms of management and how profits are shared among members.
3) The partners can enter into contract in its own name
4) LLP also offer tax benefits.
I hope friends this article help you a lot to understand the meaning and many more things about LLP. Still if you have any kind of query or suggestion regarding LLP topic then feel free to drop a message in the comment box. I will definitely resolve all your queries and will work on your suggestions.