5 Benefits of Limited Liability Partnership

A limited liability partnership is a type of business formation that involves the coming together of more than two owners. The owners collaborate for a common goal.

The UK limited liability partnership formation began in 2001, 6th of April, making it a legal structure. Although it’s not the same as a limited partnership and general partnership, it can be used with slight differences in the UK.

That said, a limited liability partnership must obey all kinds of regulations as laid down by the Limited Liability Partnership Act 2000.

SEE ALSO: Why You Need a Virtual Address for LLC? And How to Get One?

Professional bodies like solicitors, accountants, medical practitioners, and architects mainly adopt the LLP type of business. Some of these professionals chose LLP because their professional associations do not permit them to run a limited company. In addition, some of those professionals select LLP because they want to enjoy the benefits of the LLP system.

As a result, this article will explore five benefits of a limited liability partnership.

1.  Limitless Number of owners

According to the limited liability partnership, Act 2000, in section two, it is stated that two or more individuals can associate to carry on a legal business. Hence, partners may be from two to any number but not less than two ownerships. This is different from a private company that is restricted to two hundred owners.

However, the Acts clarified that each members’ name must appear on a single document that shows the approval of the business. Even if the documentation has been done, new members can still be added.

That doesn’t mean the members’ legal names must be used to register the company name during documentation. Instead, the members would decide whatever name they would like to call their company.

Although some LLPs include members’ names in their company’s name, it’s not a requirement but their choice. So, for instance, it could be called MARY, CHRISTINE & WALTERS LLP.

Another way is to select a name that explains their profession, such as LEGAL ADVISORS LLP. The members may as well create a distinct name like MIDVIEW SERVICES LLP (The names mentioned are for illustrations, and we do not have a relationship with any registered company that bears them)

Another thing is that members will also decide if they would prefer to register their company’s name with “LIMITED LIABILITY COMPANY” or just “LLP” during UK LLP formation. Nevertheless, the company can still use any of the two after completing registration at Companies House (place of registration for companies in the UK).

2.  Taxation benefits

Business owners are expected to pay a certain percentage of their profit as tax. For instance, Sole traders pay twenty percent of their income tax if they earn above £12,501. But their tax rate increases as their income increases.

Tax payment is not a choice for all business structures as it is laid down all over the UK. Nevertheless, there is a benefit for limited liability partnership members when it comes to taxation.

Limited liability partnership also enjoys a transparent tax structure for UK taxes. This means that the LLP will not pay tax, but each partner will be accessed before determining their liability for UK taxes.

As a result, limited liability partnerships enjoy a lower tax rate compared to other business structures. Also, the tax law they follow prevents double taxation.

3.  Sharing of profits

A limited company system has a laid down method of distributing its profit, which shares the profits based on each shareholder’s quota or percentage. Whereas, in LLP business, profits are shared on a discretionary basis.

Likewise, in an LLP business, each owner enjoys the freedom of returning capital to members and making other distributions such as advance loans. The good thing is that capital maintenance regulations and others do not confine it.

4. Protection from Liability

The general partnership structure makes each partner personally liable for the company’s actions. As a result, they are responsible for things like debt and the wrongdoings of fellow partners. Limited liability partnership, however, offers liability protection for members. The structure protects various partners from personal liability for negligent acts of fellow partners in the structure.

That’s not all; each partner is not responsible for the partnership’s debt or other obligations. This is a benefit for an individual partner when there are issues like potential lawsuits or negligence claims.

5. Flexibility

Partners get direct ownership in LLP, unlike how it works in other business structures that need to appoint shareholders. There are lesser protocols in selecting or removing a member or termination of rights and duties. Aside from that, LLP operates based on a written agreement, including sharing of profits among members.

Furthermore, starting and controlling a business in LLP is not stressful because it can tweak its agreement under the needs of each partner. LLP is also convenient for legal compilation, resolution, and annual meetings, unlike private limited companies.

In addition, LLP requires a low registration fee and operation fee since it is shared among partners compared with a private company.  All of these points and others make LLP flexible for each owner.


Although a limited liability partnership seems like the most appropriate business system for all business owners, it may have some downside, like public disclosure.

Carry out further research about LLP to learn more and decide if it suits you and your business.

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