Limited Liability Partnership
The limited liability partnership (LLP) is a legal entity which was introduced by the Limited Liability Partnerships Act 2000.
An LLP may be formed by any two or more persons associated for carrying on a lawful business with a view to profit.
Like a limited liability company, an LLP is a legal entity separate from its members, it also has characteristics similar to a partnership (for example, taxation, the privacy of its internal arrangements and flexibility as to capital), but the members of an LLP have no personal liability for the liabilities of the LLP as it is a separate legal entity which is distinct from its members.
If the LLP is wound up a member's liability is limited to the amount agreed with the other members or with the LLP, and may be nil.
However, there is a possibility of an individual member becoming personally liable under general law if, for example, he gives negligent advice, so it is vital that insurance is considered.
The LLP is required to produce accounts and to file them at Companies House and to file an annual return including details of members, and any mortgages the LLP enters into.
So long as the LLP is trading, its members are taxed in the same way as if they were in partnership. If it is not trading (e.g. It is only carrying on investment activities, or is being wound up) it is taxed as if it were a private company.