May 06, 2015
A limited liability partnership (LLP) is a legal corporation in the form of a partnership, in which the partners have limited liabilities. One partner is not liable for another partner's misconduct or negligence.
It offers reduced personal responsibility for business debts. The LLP itself is responsible for any debts that it runs up. It allows its members to organise their internal structure as a traditional partnership. Any new or existing firm of two or more persons can incorporate as an LLP.
The partners personal assets are safe if the business is sued and their existing insurance does not cover losses.
At least 2 of the partners need to be recorded as 'members'. All partners need to be registered to be self employed. Ideally, a partnership agreement is drawn up beforehand, called a deed of partnership, which you can draft with a solicitor's help or you can use one 'off the shelf'.
Accounts need to filed at Companies House (just like limited companies) but the members or partners are responsible for their own taxes, as individuals. LLPs register for VAT if their turnover is above the current threshold set by HMRC, same as a limited company.
Profits are split equally amongst the partners and income tax and national insurance is paid against these profits.