Limited Liability Partnerships (or LLPs) are a relatively new business structure, created by the Limited Liability Partnerships Act 2000.
An LLP is effectively a hybrid between a Private Limited Company (Ltd) and a Partnership, where the business can be run in a similar way to a Partnership, but with the liability for debts of the Partners (or ‘members’ as they are known) being limited.
The majority of LLPs are professional firms such as solicitors, accountants, surveyors or medical practitioners who have opted to change from the classic partnership approach to limit their personal exposure to the liabilities of the firm.
The LLP structure offers a similar ‘informal’ business structure to a Partnership, including the ability of members to buy in and out of the business, but has the benefit of limited liability of each of the members. However, to offset this added advantage, LLPs must meet the relatively onerous Companies House filing requirements – very similar to that expected of Private Limited Companies.
The rules by which an LLP is run are controlled by an LLP Agreement between the ‘members’, similar in scope to a Partnership Agreement.
If you are considering incorporating your business as a LLP or converting your Partnership to a LLP, please speak to our Corporate team about how best to approach this.