An LLP (or limited liability partnership) is a hybrid. Think of it like a lovechild between a company and a traditional partnership. It combines the benefits of limited liability (like a limited company), but with the organisational flexibility and tax status of a partnership structure.
An LLP is a separate person in the eyes of the law. This means that it is the LLP itself, and not its members (i.e. owners), that will enter into contracts and own assets in its name. That can be a good thing for the members, as if the business of the LLP fails the liability of the members is limited (usually to their capital contribution – much in the same way that a shareholder’s liability in respect of a company is limited to the price paid for shares).
Most LLP’s do have an LLP agreement regulating the relationship between its members. If you do not have an LLP agreement, or if an LLP agreement is badly drafted, you will be subject to the “standard” rules contained in the law governing LLP’s. In most cases the “standard” rules will not be acceptable or appropriate for you.
LLP agreements typically cover a number of points and issues, including:
LLP’s can be used for all types of businesses ranging from small family businesses (e.g. trading businesses and farms) right through to professional partnerships (e.g. dentists or accountants), joint ventures and tax efficient investment vehicles (e.g. for property investment).
If you are considering an LLP and want to make sure it’s right for you, the specialist corporate lawyers at Bray & Bray are experts in helping businesses to make the right decisions. We can also advise you of the tax implications that you would need to discuss with your accountant.
The corporate law solicitors at Bray & Bray are based at our head office in Leicester, but are always happy to arrange to meet at one of our other office locations within Leicestershire. Contact us with any questions you may have or call your nearest office to arrange an appointment:
Leicester call us on 0116 254 8871.
Hinckley call us on 01455 639 900.
Market Harborough call us on 01858 467 181.
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