Formation of UK Limited Liability Partnership (UK LLP)

Basic Company Requirements

Company Name 

UK LLPs must use the suffix Limited Liability Partnership or LLP to denote limited liability and can use any name unless it includes words such as Empire, Crown, Imperial, Windsor, Royal, Assurance, Bank, Building Society British, National, Great Britain, United Kingdom, England, English, Scotland, Scottish, Wales, Welsh, Ireland or Irish.

Formation 
An LLP should have a Deed of Partnership at the time of formation – a legally binding agreement between members which lays out the rights and responsibilities of each party to the agreement. Alongside administrative details such as the names and addresses of members, the deed will also include details on the amount of capital each partner will contribute to the business, what their individual roles and responsibilities will be in running the business and what would happen if a partner leaves the business. 

Members 
Individuals or existing businesses can be members of a Limited Liability Partnership, and the LLP must have at least 2 members. The minimum capital contribution is 2 GBP. The rights and responsibilities of all members would usually be laid out in a Deed of Partnership. 
The LLP would typically select a Designated Member (or members) who would be responsible for maintaining communications with The Companies House, preparing accounts and acting for the LLP if for some reason it is dissolved further down the line. 
Certain information about company shareholders will be disclosed on public record. 

Management 
The members of an LLP are free to agree amongst themselves the relationship between them, rather as partners do in a partnership, the LLP itself is a separate legal entity, owned by the members. This means that the LLP is able to enter into contracts and hold property and the LLP is able to continue in existence independent of changes in membership. What is important is ensuring that the agreement between members addresses the issue of management, particularly as an LLP does not have to have a formal members agreement on creation. 

Registered Office 
Every LLP must have a registered office, which is the address to which any formal communications may be sent. The registered office must be a physical location as people have the right to visit the office to inspect certain registers and other documents. They should also be able to deliver documents there by hand. 

Meetings 
LLP meetings don’t have to be held in the UK. 

Incorporation Time 
Usually within 1 business day. 

Basic Tax Notes
LLP’s are taxed quite differently from the companies in that the profits are treated as the personal income of the members as if they had run their business as a partnership. LLP’s will be tax transparent for UK purposes. However, it is unclear whether other jurisdictions will treat LLP’s in this way. It is possible that some jurisdictions will ignore the situation in the UK and treat them as corporations and tax them accordingly. LLPs which have no business activities in UK, do not derive any income from UK sources, and are managed and controlled by Members who are not UK residents, are not regarded as residents for tax purposes in UK and therefore are not entitled to take advantage of international Double Taxation agreements concluded by the UK with other countries. 

Audit And Financial Returns 
LLP’s must produce and publish financial accounts with a similar level of detail to a similar sized limited company and will have to submit accounts and an annual return to the Companies House each year. This publication requirement is far more demanding than the position for normal partnerships and some specific accounting rules may lead to different profits from those of a normal partnership. The legislation also requires that the profit share of the highest earning member is published if the LLP’s profits exceed 200,000 GBP. A further tax consideration arises in respect of overseas operations. A nominated member of the LLP will be responsible for informing the Inland Revenue of the LLP’s existence and for filling in the annual Partnership tax return. This return will also contain a ’Partnership Statement’ which shows how profits have been divided up amongst the members.