Limited Liability Partnerships (LLPs) (Business and organisational characteristics)-FS Flashcards
(8 cards)
What is a key structural feature that distinguishes a Limited Liability Partnership (LLP) from a general partnership?
An LLP is an incorporated business structure with a separate legal personality, meaning it is legally distinct from its members and can hold assets and liabilities in its own name.
What legal protection do members of an LLP enjoy that general partners in a partnership do not?
Members of an LLP have limited liability, meaning they are not personally liable for the LLP’s debts beyond their investment. This contrasts with general partnerships, where partners have unlimited personal liability.
What is the minimum number of members required to incorporate a Limited Liability Partnership?
An LLP must have at least two members, who may be individuals or corporate entities, as required by Section 2(1)(a) of the Limited Liability Partnerships Act 2000.
What are the key steps required to form a Limited Liability Partnership?
To form an LLP:
1. Two or more persons must subscribe to an incorporation document,
- This document must be delivered to Companies House AND:
- A registration fee must be paid, after which a Certificate of Incorporation is issued.
What statute governs the creation and operation of Limited Liability Partnerships in England and Wales?
The Limited Liability Partnerships Act 2000 governs LLPs, detailing formation, structure, and the rights and obligations of members.
How are LLP members taxed on their income from the business?
Each member of an LLP is taxed as a self-employed individual, paying income tax on their share of the profits, similar to general partnerships.
Why might LLPs and companies be more attractive to third parties compared to unincorporated structures?
LLPs and companies are subject to greater disclosure requirements, such as publicly accessible partner identity and financial information, which can enhance trust and credibility with third parties.
What operational benefit does an LLP share with general partnerships?
LLPs benefit from the flexibility and minimal formalities typical of partnerships, making them easier to manage than limited companies, while still offering limited liability.
