How to start and Run a Limited Liability Partnership?
A complete overview on how to start and run a LLP
With 2 or more members on board, you can run a business by forming a limited liability partnership (LLP). Any company, organization or person can be a member and may be referred to as a ‘corporate member’.
Each member is required to pay tax on their share of gains but can not be held personally accountable for any debts that the business is unable to repay
If you are planning to set up an LLP, you are required to:
- Select a name
- Have a registered business address (Remember that this address will be publicly available
- Have 2 delegated members on board
- Have an LLP agreement that states the nature of your business and how you will run it
- Register the partnership with Companies House
You need to ensure that you check the rules of setting up a limited partnership, as the rules differ for setting up an ordinary business partnership and limited liability partnership.
Choose a name
Choose a very unique name for your partnership and ensure that the name must end in LLP. For Wales, you can use Welsh equivalents at the end
You are not allowed to select a name that is either the same or too similar to another existing business partnership name registered in the UK. Two conditions should be avoided when choosing a name
- Same as
- Too like
‘Same as’ name is used when the only underlying difference to the existing name includes
- A difference of certain punctuation or a special character, for instance, exclamation mark or plus sign
- A word or character that is almost similar in meaning or appearance with the existing name
- A word or character often used in the majority of UK companies, for instance, company and co.
Here are the names that are ‘same as’ Hands Ltd
‘Hands UK Ltd’, ‘Hand’s Ltd ’
Same as a name can only be registered if:
- Your LLP and the LLP with the existing name belong to the same group
- You have a written document that acts as a proof of no objection from the LLP with the existing name
‘Too like’ name
You might be requested to change your name if someone lodges a complaint and Companies House agrees that the name is ‘Too like’ the name of a business registered before.
‘Easy Electrics For You Ltd’ is too like ‘Ez Electrics 4U Ltd’
Ensure that your business name does not offend any individual or entity.
Ensure that your business does not contain a sensitive word or expression, and should not show any association or connection with the local authority or government, unless permitted to do so.
Example: For instance, if you plan to use ‘Accredited’ in your company’s name, then you must be granted permission from the Department for Business, Energy and Industrial Strategy (BEIS)
You are allowed to use a different business name than the registered name if you plan to provide different services.
You must ensure that your business name:
- Should not include ‘limited’, LTD’, limited liability partnership, LLP, public limited company, etc.
- Should not be same as a registered trademark.
- Should not contain any sensitive or controversial phrase or expression unless granted permission.
To ensure that no one conducts business under your name, you must register your business name as a trademark.
You are not allowed to use other registered trademarks as your business name
Displaying your name:
As per the rules of ‘displaying your company name’, you are allowed to trade under either your own name or choose another name for your business. However, there is no compulsion to register your business name.
Your official paperwork must include the names of all the partners and businesses (if you have one), for instance, on invoices, receipts and letters.
The registered address is the address where you receive official post and communications, for instance, letters from HMRC or Companies House, etc.
Your registered address should be:
- A Physical address
- In the same area or country where your LLP is registered, for instance, LLP registered in Wales must have a registered address in Wales as well.
You can also use a PO box, but you must ensure that you include your physical address and postcode after the PO box number.
Your home address can also be used, but it will be publicly available.
Registration of LLP
You can register your Limited Liability Partnership (LLP) either through an agent, by post or an approved software. After you have successfully registered the LLP, you’ll receive a certificate of incorporation. For complete registration and accounting service why not speak to a Partnership Accountant or find an Accountant in London who can help you with the process.
To register electronically, you can use an approved third-party software. However, charges may differ according to the software you use.
Your LLP will be registered within 24 hours if you used a third-party software. If you applied for registration before 3 pm on a working day and paid a higher fee for it, then your LLP can be registered on the same day. It is advisable to hire a partnership accountant to help you register your LLP while also providing the relevant accounting services. Make sure the accountants have the relevant tax accountants who help with the individual partnership tax returns as well.
Register by post
To register by post, download and complete the application to register a Limited Liability Partnership (LLP).
Use an Agent or an Accounting firm
You may register your LLP through a formation agent, however, charges may vary according to the agent. An alternative to an agent would be to use an Accountant, you can find an accountant through a referral or try searching the internet for Accountants in London, Online Accountants, Tax Accountants or an Accounting Firm nearby.
Your LLP must have at least 2 ‘designated members’ on board who are also assigned more responsibilities than the others. There is no limit to how many ‘ordinary members’ you can have on board.
Making the LLP agreement
Ensure that you have an LLP agreement with any members on board as part of setting up your LLP. An agreement states how the LLP will be run, which may include details about:
- How will the profits be shared among members
- Who are liable to follow and agree with decisions
- Responsibilities of the members
- The procedure of joining or leaving the LLP
You may prepare the agreement on your own, or you can hire a solicitor to prepare the agreement for you. If you do not have a solicitor ask your accountant to refer one.
Responsibilities of all members
All of the members are liable to fulfil their duties and obligations mentioned in the LLP agreement and will be answerable to any inconvenience or discrepancy.
Responsibilities of designated members
As per the rules, the designated members have more responsibilities and duties to carry out as compared to other members. Following are the main responsibilities of designated members:
- Ensure the registration of business for Self-assessment with HMRC- Remember, you also need to register separately as an individual, make sure you have a partnership accountant who will help you perform all your regulatory responsibilities.
- Ensure the registration of the LLP for VAT, if the expected business sales are expected to exceed £ 85,000 per annum
- Hiring an auditor, but only if required
- Keeping accounting records
- Managing and sending annual accounts to Companies House
- Sending a confirmation statement to Companies House
Their additional responsibilities include:
-Informing Companies House about any changes in the LLP ( for instance, the registered business name, address or change in management)
-Taking the necessary measures if LLP is wound up and dissolved
Designated members can be called out for any legal action if they fail to meet their legal obligation and in addition, the LLP can also be taken off the register.
Changes you must report
You are liable to report to Companies House of any changes made to the LLP’s registered address, registered business name or registered member’s details.
Change your registered address
You can avail Companies House’s online service to change your registered address.
You can also download and complete the ‘change a registered address for an LLP’ form and may send it to the address mentioned on the form.
Change where your LLP records are kept
You can avail Companies House’s online service to change the address where your LLP records are kept, if not kept at the registered address.
You can also avail this service to inform Companies House if you plan to move your LLP records to any alternate address registered
You can also download and complete paper forms to:
- Make changes to address where LLP records are kept
- State which LLP records will be kept at the alternative address
Change members’ details
You can avail Companies House’s online service to change or modify any information about your members.
You can also download and complete paper forms to make any changes:
- Members’ change of details form
- Corporate members’ change of details form
After filing in the form, you may send it to the address mentioned on the form.
You can consult ‘guidance on how to change a members’ details’ provided by Companies House for any further query.
Change your LLP’s name
You must inform Companies House of any changes made to the LLP’s registered name. You can inform either by post, through an agent, electronically or by using an accountant.
Change the name by post
To change the name by post, you can download and fill in a notice of change of name of an LLP
You are required to send a cheque or postal order of 10 to the address mentioned on the form- it usually takes 5 days.
For same day service
If your notice reaches Companies House before 3 pm (Monday to Friday), then your name change can be registered at the very same today, provided that you write ‘’Same day change of name’’ on the envelope and send a cheque or postal order of 50.
However, if your notice arrives at the Companies House after 3 pm, your name change will be registered in the next working day.
Use an agent
You can register your name change through a formation agent, however, charges may vary according to the agent’s demand.
Change the name electronically
You can avail an approved third-party software to change your LLP’s name, however, charges may vary according to the software and you are also required to pay Companies House fee as well.
After successful registration, your LLP’s new name will appear on the Companies House register within 24 hours.
Running an LLP can get complicated due to the compliance requirements from both HMRC and Companies House. The tax returns can also get confusing as you require one for the partnership and then one for each partner to be prepared and submitted using the partnership’s tax return. Having a competent accountant on board can help save your LLP from errors, costly mistakes and wasted time.
Clear House Accountants are specialist Accountants in London who have years of experience working with professional partnerships helping them remain compliant while saving tax and money. Our smart solutions help businesses grow faster and stay ahead of regulatory requirements.
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