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What is a Limited Liability Partnership?

when going into business together many

entrepreneurs may not realize the legal

implications of forming a partnership

even if the partnership is not formally

registered by virtue of doing business

together

the partnership app automatically

applies it is therefore important to

decide upon the best type of partnership

all companies to form and register with

your partner in this video we take a

look at the limited liability

partnerships to help you make the best

choice for your business so what is the

difference between a limited liability

partnership and a traditional

partnership in terms of tax liability

profit distribution and internal

management and limited liability

partnership also known as an LLP has a

same structure the traditional

partnership the core difference between

them lies in the partners financial

accountability in a traditional

partnership the partners are fully

liable for all of the business's debt in

an LLP on the other hand the partners

are not liable for the business expense

only the capital they initially invested

into the business the LLP agreement

outlines each partners specific duties

responsibilities and liabilities as well

as details the allocation of profits

terms for the removal or additional

partners and terms of dismissal it is

therefore usually more attractive

options with people going into business

together than a traditional partnership

to register an LLP you will need to have

at least two members to register your

own you will need to have a second

dormant company to serve as a second

member you will also need to have a

unique LLP names a registered office

address and a statement of compliance

forming an LLP also requires two

designated members in addition to the

partners and their role is to perform

additional administrative and managerial

duties on behalf of the LLP and other

members once you have all of the above

factors you can register your LLP online

with Companies House by purchasing a

first formation of LLP formation package

for approximately $39.99 once the

package and any necessary address

services have been purchased simply

complete the online application form and

file it electronically with Companies

House the partnership will be

incorporated within three working hours

there are many advantages to forming an

LLP the most obvious one being reduced

financial liability LLP is can be hugely

beneficial for certain businesses

firstly the reduced financial liability

for partners was very attractive

partners cannot lose more than their

initial investment if a company gets

into financial difficulties or faces

legal claims it also offers a large

degree of flexibility especially when it

comes to their internal structure

allowing partners to vary the structure

as often or extensively as needed it can

lower your tax bill as ll please do not

pay corporation tax or file company tax

returns partners are taxed as

individuals and must file a personal

self-assessment tax return annually

whilst the LLP must file a partnership

self-assessment tax return partners must

also pay national insurance

contributions in addition to paint

income tax and filing their own tax

return however as they are considered

self-employed the national contributions

are much lower than for directors and a

limited company this sometimes

significantly lowers the LLC's overall

tax bill and allows patents to taken the

same net salary as direct and evil end

of businesses owning less partners in an

LLP are automatically able to run their

businesses operations unlike

shareholders in the limited company

giving partners greater control the

question is whether an LLC is right for

you deciding on the appropriate

structure for your business will depend

on various factors ranging from the

nature of the business to your

preference to taking home profits

seeking the advice of an experienced

Lister is therefore strongly recommended

before registering your business as an

LLP a limited company or other entities

for more information or for expert

advice on business or person legal

issues contact us at Casa bond

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