Starting a Limited Liability Partnership (LLP) in the UK provides business owners with a blend of flexibility and protection. An LLP enables two or more members, whether individuals or companies, to run a business while minimising personal liability for business debts. Members share profits and tax liabilities similarly to a traditional partnership.Â
If you want to set up an LLP that aligns with your business objectives, make sure to check out the legal requirements beforehand. This is because it differs from other business structures like ordinary partnerships or private limited companies.Â
The following blog offers a step-by-step guide for setting up an LLP. Continue reading to find out.Â
Step 1: Choose a Name
Choosing the right name for a limited liability partnership requires some careful consideration:Â
- The LLPâs name should end with âLimited Liability Partnershipâ or âLLPâ.Â
- It should not be too similar to other existing business names. For instance, if the name âBakers LLPâ is already taken, registering âBakerâs LLPâ would be too close.
- The name should not include offensive language. Furthermore, unless you have the relevant authorisation, your LLP name should not suggest a connection with the government. For example, to include a term like âAccreditedâ in your name, you would need approval from the relevant authorities.
- You can do business under a different name from your registered LLP name. However, this business name should not include terms like âlimitedâ, âLtdâ, âlimited liability partnershipâ, âLLPâ, âpublic limited companyâ or âplcâ. Moreover, it should not be the same as an already existing trade mark.Â
- All official documents, such as invoices and letters, should display your registered LLP name and list all partnersâ names.
Step 2: Get a Registered Office Address and Email AddressÂ
When forming an LLP in the UK, you must give a valid registered office address and an email address. The physical address must be in the UK and within the same country where your LLP is registered. The address should be one where any documents submitted to the LLP are typically observed and handled by someone representing the LLP. It should also be a location where document deliveries can be officially recorded and evidence of receipt issued.Â
Please Note: Companies cannot use a PO Box as the registered office address.Â
Step 3: Register the Limited Liability PartnershipÂ
There are two alternatives to registering your Limited Liability Partnership (LLP): registering yourself or hiring a formation agent to handle the procedure. After registration, you will receive a certificate of incorporation from Companies House.
- Third-party software can be used for digital registration, which generally allows for faster processing.Â
- Alternatively, you can register by post by completing the required application forms. This approach often takes longer to process than digital submissions.
Step 4: Establish Membersâ ResponsibilitiesÂ
An LLP in the UK requires at least two designated members in addition to other ordinary members. It is important to draft an LLP agreement that specifies how the LLP will work, such as profit sharing, decision-making processes, member roles, and guidelines for joining or leaving the organisation.
All members must perform the tasks stipulated in the LLP agreement and register for self-assessment with HMRC. Designated members have additional responsibilities, such as:Â
- Registering the partnership for VAT if the annual sales exceed £90,000
- Appointing an auditor
- Keeping accounting records
- Ensuring that all necessary documents, such as annual accounts and confirmation statements, are submitted to Companies House
- Notifying Companies House of changes to the companyâs name or address
- Acting on behalf of the LLP during the dissolution
Step 5: Report Changes to the LLPÂ
You must notify Companies House of any changes to your LLP, such as updates to the registered or alternative address, the LLPâs name, or member details. This can be accomplished through their web service, which is useful for registering changes and notifying which records are stored at a different address.Â
Alternatively, you can use paper forms to change the registration address of the LLP, where you maintain your records, or to update the information of members.Â
Bottom LineÂ
Setting up an LLP in the UK involves a number of important steps, ranging from selecting a unique name to informing Companies House of any changes. By carefully following these guidelines, you may ensure that your LLP runs efficiently and complies with legal requirements.
Once your business is up and running, the professionals at DataTracks can help you prepare error-free iXBRL reports for HMRC filing. You can contact our experts at [email protected] or +44 (20) 3608 8035.
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