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There are three types of partnerships: a limited liability partnership (LLP), a limited partnership (LP) and an ordinary partnership.
An LLP is a partnership between two or more persons that is registered at Companies House. Registration and compliance with company law gives the partners the advantage of limited liability in the same way that shareholders are protected in limited companies (LTDs).
An LP is also registered at Companies House. However, it must have at least one general partner who does not have limited liability and accepts the liability of the partnership. The remaining partners in an LP can enjoy the protection of limited liability.
Traditional partnerships (those that are not registered at Companies House) do not enjoy limited liability and are becoming less common.
Limited liability means that the partners cannot be held financially responsible for the debts of the partnership and their personal assets are safe. LLPs have become particularly popular with financial services organisations and professional practices such as accountants, lawyers, doctors, surveyors and engineers. Furthermore, LLPs can suit small and family owned businesses. Their popularity stems from the flexibility of working and profit sharing arrangements they can accommodate.
LLPs are popular because they offer 4 key advantages:
There are a number of disadvantages in using the LLP model for business:
Designated Members:
A LLP must have at least two partners who are designated members. It is quite usual for all partners to be designated members, but this is not essential. Designated members are the legal representatives of an LLP and are responsible for ensuring that an LLP meets its statutory and compliance obligations.
Duties of the designated partners:
Setting up a LLP:
You can set up a LLP by registering at Companies House. This is a simple process that can be performed using our website. It takes a few minutes to complete the application, and once you have made the payment, it is submitted to Companies House, who will process it in within 3 hours to one working day, depending on their workload. You will need the following:
Partnership Agreements:
Limited companies have a written constitution called the Articles of Association, which are available for viewing on the Companies House website. However, LLPs are not obliged to have one. Additionally, LLPs normally have a partnership agreement, which is not a publicly available document. Our partnership pack includes a free partnership agreement template. Partnership agreements normally deal with the following:
In the event that there is no agreement (written or otherwise), the following arrangement will apply:
Partnership Number Falls below 2:
In the event that a partnership is left with only one partner, the partnership has 6 months to find an additional partner. If the partnership fails to restore the partnership to a minimum of 2, it will lose its limited liability status.
Dormant Partnership Accounts:
All LLPs, whether they have traded or not, are obliged to deliver accounts to Companies House. However, a LLP is dormant if it has had no transactions during an accounting period. In such a case, it can deliver dormant partnership accounts.
Just like most formation agents, we use a third-party software system that links our orders directly to Companies House. Once your order is placed, it is automatically forwarded to Companies House. The time taken is entirely dependent on Companies House’s workload. Companies House will normally complete your application within 1 working day. In unusual circumstances, Companies House systems can be interrupted and take more than a day to resolve, but this is very rare.
There is no requirement to specify the objects of your company or the nature of your trade in the articles of association (constitution) of the company. However, you will be asked to provide a SIC (Standard Industrial Classification) code when you make your application. A drop-down list of all the available classifications is available at the appropriate juncture in the application. You only need to select one code, and it should be the code that is the most accurate. It is very rare to find an exact SIC match, so use a general SIC match if that is all that is available.
We offer a discount to first time buyers who wish only to buy a basic limited company formation. The basic price is always published and clearly stated but will vary from time to time. There are never any hidden charges. There is a selection of more expensive packages, and there are extra services you can buy. We charge for all the extras, but they are entirely optional.
You need a shareholder and a director. The shareholder and the director can be the same person, so a company can be formed with just 1 person. Shareholders are the owners of the company while the directors are the people responsible for managing a company. The director must be at least 16 years of age.
You do not need any documents to form a company, and the entire process is online. Our systems generate and submit forms IN01 and the Memorandum and articles of association on your behalf when you complete your order.
Subject to specific rules, you can use any company name, provided it does not already exist or resembles another company name on the Companies House Register. Our name search box is linked to Companies House and will advise you if your proposed name is available.
We are a member of ACRA, the Association of Company Registration Agents. ACRA is the trade body of company formation agents, founded to promote good practice and provide a forum for its members.
Our membership is a statement of our commitment to the professional standards promoted by ACRA and our fellow members.