UK LLP formation has become the most popular choice for accounting firms and law firms in the UK. Here we will discuss the benefits of this type of company and the LLP vs. Ltd. The flexibility is quite attractive because, like an Ltd. company in the UK, it has an unlimited lifespan, aside from the life of its partners. Common questions are, “Can a limited company be a member of an LLP?” and “Who can be a member of an LLP?” The answer is that yes, a limited company can be a member of an LLP, as well as a natural person. Additionally, any person or company, regardless or residence or citizenship can become a member of an LLP. For that matter, an LLP can be a shareholder of a limited company (corporation).
So, it is possible to have an LLP with only one human person involved. An LLP must have at least two members, so the natural person can be one of the members. Then, a limited company owned by that same person can be the other member.
Contact an experienced agent (such as this one). Your agent will register the LLP at Companies House in the UK.
You will be glad to know that the UK LLP does not pay any taxes. The tax responsibility simply flows through to the members, without any taxes at the company level.
UK LLP Benefits
Forming a UK LLP offers multiple benefits. These benefits include:
- A UK limited liability partnership is a corporate entity according to UK Law. That is, unlike normal partnerships, it has continuous legal existence that is independent of the lives of the partners.
- UK LLP members are protected from business liability (in the absence of fraud or wrongful trading) So, they are protected from losing more than they have invested in the company.
- A UK LLP pays not taxes in the UK. The tax responsibility flows through to the partners as self-employed income rather than as employees.
- There no need to have a written partnership agreement, unless desire, because regulations can apply by default.
- The registration of a company in the UK can be completed quickly.
- Annual company meetings are required, but these meetings do not need to be held in the UK and can be done anywhere in the world.
- Corporate tax exemption is usually applied to UK LLPs as long as the corporation does not do business or trade in the UK.
- Only one partner is required in order to incorporate a UK LLP.
- The UK offers corporations a minimum authorized capital of GBP.
Corporate legislation in the UK is regulated by company law under the Companies Act of 2006. This Act dictates the corporate formation and functions in the UK. Other acts that also regulate corporate actions in the UK include the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases. It is very similar to the LLC in the US. Many in the accounting and legal professions in the UK now use these entities to operate their own firms.
Those forming an LLP in the UK must pick a unique name that is not similar to already existing company names. Typically, three versions of the business name are submitted with the hope that one of them will be approved. Company names in the UK may be reserved before filing if desired.
Companies registering their names in the UK use the suffix “Limited Liability Partnership,” “LLP,” or the Welsh language equivalent, “Partneriaeth Atebolrwydd Cyfyngedig,” or “PAC.”
The words that cannot be included in a company name in the UK includes without special permission are Empire, Crown, Imperial, Windsor, Royal, Assurance, Bank, Building Society British, National, Great Britain, United Kingdom, England, English, Scotland, Scottish, Wales, Welsh, Ireland or Irish. However, the initials ‘GB’ or ‘UK’ may be used.
’European’ in a name can only be used with approval, and if the corporation shows links to the EU. ‘International’ also requires approval, and the company must be involved in overseas trading to use this word in its name.
Office Address and Local Agent
Those pursuing formation of an LLP in the UK must have both a local registered agent and a local office address. This address will be used for process service requests, and will be provided by your agent (such as this one) that forms the company.
An LLP in the UK must have at least one shareholder. The maximum number of allowed shareholders is fifty. The UK allows both private persons and corporate entities to be shareholders, and also permits for joint shares.
Directors and Officers
A UK LLP must have at least one director. A secretary is required, so all companies must have at least two people, because a sole director cannot be a secretary.
The minimum authorized capital for company and limited company owners choosing to incorporate LLPs in the UK is GBP 0. That is, there is not a requirement to declare share capital.
Company and limited company owners forming a LLP corporation in the UK may be exempt from corporate taxation. The corporation can remain exempt from taxes provided that no business or trade is carried out with or within the United Kingdom
Annual registration fees company and limited company owners incorporating in the UK typically cost about GBP 900 a year.
A Prospective company owner forming a UK LLP should expect some of the corporate information to be made available to the public.
For example because two designated officers, an executive director and a secretary must be appointed by a UK LLP and are considered liable for certain aspects of the company, their information is generally made public.
Company accounts also must be filed and may be made available for inspection by the public.
Accounting and Audit Requirements
Companies must keep corporate accounting records and submit accounts for inspection by the public. Owners of LLPs in the UK are required to file annual tax returns and keep yearly tax and financial records in case of audits. Companies must file annual tax returns by the deadline annually, which is usually 9 months and 1 day at the end of the corporate accounting period.
Annual General Meeting
An annual general meeting is required of UK corporations, but these meetings do not need to be held in the UK. Meetings for UK corporations can be held anywhere in the world.
Time Required for Incorporation
Those choosing to incorporate an LLP in the UK can expect the entire process to take about 3 weeks. This completion time depends on the turnaround with the trust name registration, as well as how accurately the company registration documents are. Because your agent (such as this one) will likely have formed several of them, the requirements should be met on the first filing attempt.
Shelf companies (companies that are already filed and placed on the “shelf” for purchase) are available for immediate acquisition. If speed of formation or company age is important to you, this option may be a favorable choice.