Limited Liability Partnership
LLP (Limited Liability Partnership) is a good way to ensure that individual owners such as you do not have to deal with too many liabilities in case your business runs into financial trouble. It is similar to a standard Partnership except for the extent of liability as well as the extent of administrative duties. It has to be noted that its registered office should be in the U.K.
There are many advantages to forming a LLP and one of them is the flexibility that it offers to the partners. The LLP is not taxed; instead individual partners have to pay taxes.
- An LLP has a distinct entity and is separate from that of the partners. As a partner, you have limited liability whereas the LLP will be held liable for any debts it incurs, subject to the availability of assets.
- Since an LLP does not have any shares and therefore no shareholders, it is not required to comply with laws regarding the maintenance of Capital.
- While an LLP does not have directors, it does need to have at least 2 members who will be held responsible in case the company is involved in illegal activities. This is very reassuring to people who do business with an LLP since they know that the members have responsibilities similar to director of companies.
- The LLP agreement should also specify exactly how much money has been contributed by each member. This will ensure that assets can be divided equally in the event of the liquidation of the company.
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