Limited liability partnerships

Question 1

briefly, what is an LLP? What is required?

Answer 1

business structure which combines elements of a partnership and company

Must have at least 2 designated members (designated members have administrative responsibilities i.e. delivering information to CH)

Question 2

what governs the LLP?

Answer 2

LLP Regulations provide a default contract in the absence of agreement

Question 3

how is an LLP formed?

Answer 3

Must be incorporated by CH (LLP agreement need not be filed)

Question 4

how is an LLP taxed?

Answer 4

Each partner pays tax on their share of the profits (individual partners pay IT + CGT, companies pay corporation tax)

Question 5

what are the advantages of LLPs? (2)

Answer 5

• Has SLP so members have limited liability
• Flexibility in terms of management structure

Question 6

what are the disadvantages of LLPs? (2)

Answer 6

• Administrative & accounting requirements i.e. member details, charges & mortgages, annual accounts to be filed with CH (the information is publicly available)
• More costly to start the business (due to registration fees)