If you're starting a business with a business partner you'll probably want to register your company as a Limitied Liability Partnership (LLP). An LLP will give you a legal framework around which to share responsibility, as well as limiting the risk you'll both incur. This guide will explain why you should set up as an LLP.
- What is an LLP?
- LLPs - the benefits
- How to register
What is an LLP?
A limited liability partnership, or LLP, is similar to a normal partnership but means the partners do not bear legal or financial responsibility for the business. This means if you only stand to lose what you invested in the business, rather than in an ordinary partnership, where you may have secured loans against personal assets. LLPs are more expensive and require more administration to set up, but incur fewer risks.
LLPs - the benefits
Unlike ordinary partnerships, with an LLP, you will not lose any more than you have put into the business because your loans are not secured against any of your personal assets, and the legal framework makes it easier to bring a new partner in if one decides to leave. The structure also means each member receives an equal share of the profits.
How to register
You can either register an LLP by requesting or downloading registration forms from Companies House, or through a solicitor, accountant or formation agent. The cost is £20, or £50 for same-day registration. Make sure you draw up a partnership contract, preferably with help from a solicitor.
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