A limited liability partnership offers many of the benefits of a conventional partnership. However, it has the added advantage of protecting individual partners from any personal liability for debts run up by the company.

You may also want to read our article on registering a conventional partnership.

How do I register a limited liability partnership?

Registering a limited liability partnership (referred to as an LLP) is rather easier than registering a limited company. In order to register a limited liability partnership you need only fill in one form – LLP2, which is available from Companies House by clicking here.

Companies House currently charge £20 for incorporation, or £50 for a one-day turnaround.

However, there are several aspects of limited liability partnerships that must be understood before you begin the process of incorporation.

What are LLP ‘members’?

A limited liability partnership can be formed by two or more people. These individuals are known as ‘members’. An LLP must have at least two members. Of these, at least two must be ‘designated members’.

Designated members could be thought of as broadly similar to the directors of a limited company. They are the individuals with the responsibility for ensuring that the partnership fulfils its legal obligations. They are personally responsible, for example, for making sure that the LLP’s annual returns are completed and sent to Companies House.

Generally speaking it is the designated members that make the major decisions regarding the running of the company. Similarly, designated members normally share any profits that are made. The way in which rights are divided amongst designated members is generally outlined in the LLP’s ‘deed of partnership’.

What is a deed of partnership?

A deed of partnership is a document outlining the way in which a partnership will be run, and the nature of the relationship between the partners. It is not legally necessary to have a deed of partnership in order to set up a limited liability partnership. However, it is highly recommended as a way of helping to prevent future conflict between partners.

A deed of partnership describes:

• how profits will be shared between the partners;
• the initial capital contribution made by each of the partners;
• the responsibilities of each partner, including the amount of time that they will put into the running of the partnership, as well as any specific tasks entrusted to each individual;
• and procedures for changes to the partnership, including what will happen when a partner is replaced or a new partner is added.

If you do not have a deed of partnership, it will be assumed for legal purposes that your partnership is governed by the Limited Liability Partnerships Act 2000. This is unsuitable for many organisations. As such, it is always recommended that those intending to establish a partnership should contact a solicitor to discuss their requirements and draw up a deed of partnership.