Limited Liability Partnership

The ‘Limited Liability Partnership” (LLP) format of registered company was originally created to enable the professions to take advantage of limited liability, but its popularity is growing among a much wider range of business.

The advantage of an LLP is that the partners have protection against the debts of the partnership if things go wrong unlike a standard partnership, where the Partners can be held liable for the debts of the other Partners (even to the point of bankrupting the individuals). By registering as a Limited Liability Partnership (LLP) the Members (Partners) protect their private assets. If the business fails, the Members only lose the money they have actually invested in the Partnership.

The LLP has to report and file accounts and confirmation statement with Companies House just as a limited company does.

On the tax side unlike a limited company it does not pay corporation tax; however, the partners are taxed as self employed individuals through the self-assessment.

Pros:

Members(partners) have protection against the debts of the business.
In a simple business (two or more people) LLP can be simpler to administer than a limited company.

Cons:

You pay both Income tax and National Insurance on your profits.
You have to file accounts with Companies House and tax returns with HMRC.