How to Register Your Business as an LLP ?
One of the first things to consider when launching a retail business is exactly what form you should register it under. Many entrepreneurs prefer to launch their new ventures as Limited Liability Partnerships (LLP). An LLP can provide you with all of the benefits and flexibility of a partnership but with the added perk of being less personally liable for any business expenses.
So, what is an LLP exactly? What do you need to have to form an LLP? And how can you register a new business as an LLP in the UK? If you are curious about any of these questions, then keep reading to find out all you need to know about registering your new retail business as an LLP.
What is an LLP?
LLP stands for Limited Liability Partnership. A normal partnership is defined in legal terms as two or more sole traders working under one business name. All of the partners in this structure are legally liable for any business expenses incurred. An LLP is recognised as being a separate legal entity. The LLP structure is a form of business registration that provides the partners with more financial protection and less liability, much like a Limited Company does. This means that the LLP in and of itself would be responsible for any debts incurred by it and not the individual partners involved.
What Do You Need to Have to Form an LLP?
Anyone intending to start a for-profit business can create an LLP. Since it is registered as a ‘partnership’, an LLP must be formed by at least two people. At least two of the members must be ‘designated members’. Although all members of the LLP have duties, this gives the designated members extra responsibilities that other members do not have. If no designated members are nominated, then it is legally assumed that all members are classified as designated.
The rights and responsibilities of the members, as well as their percentage of dividends, are detailed under an agreement known as a ‘deed of partnership’.
Designated members in an LLP must:
- Register the LLP at Companies House
- Register the business for VAT, if required or desired
- Register the business for Self-Assessment with HMRC
- If required, appoint an auditor
- Prepare and sign all accounts
- Keep records
- Provide Companies House with paperwork
- Notify Companies House of any changes to partners, the name of the business or any changes of address
- Perform tasks on behalf of the LLP if it is dissolved or wound up
Registering a New LLP
The first step in registering an LLP is to choose an appropriate name. The name cannot be similar to or the same as an existing business name. It cannot be a word that could be deemed offensive. The name also cannot make the business sound as if it is connected with the UK government if it is not. The name you register the LLP under does not necessarily have to be the same one that you trade under.
The next step is to download an application form LL IN01 from Companies House and fill it out. You will need to include the names of all partners, the designated partners, and the official address of the business. This must be an actual physical address and it must be located in the same country that your LLP is registered in. PO Boxes can be used, but there must still be a physical address provided alongside them. The official registered address of the LLP’s head office is where all correspondence from HMRC and Companies House will be sent.
The paperwork can be sent to Companies House either by post or electronically via special software or by using the services of a formation agent. To incorporate an LLP via software attracts a fee of £10. By post it costs £40. Same-day incorporation costs £30 via software and £100 by post.
The process of registering an LLP usually takes up to four hours if it is done online. This length of time can vary, however, depending on how busy Companies House is. It is advised to complete your application as early in the day as you can. If you have submitted an application to register an LLP by post, then usually Companies House will send confirmation within one to two weeks.
Setting up an LLP can provide you with many of the benefits of a registered limited liability company. It is, however, more complicated to manage than a normal partnership. To register an LLP, you must choose an appropriate name, select your designated partners and fill out and return a form to Companies House.
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