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An LLP is similar in some ways to a standard Partnership, except that the individual members have lower liabilities to any debts which may arise from running the business.
There are more administrative duties involved compared to the Partnership business structure. In fact, an LLP is more similar to operating a Limited Company. In terms of liability, the Limited Liability Partnership is itself liable for debts run up in running the business, rather that the individual members of the LLP. As a result, LLP's are only recommended for profit running businesses.
The LLP would typically select a "Designated Member" (or members) who would be responsible for maintaining communications with Companies House, preparing accounts and acting for the LLP if for some reason it is dissolved further down the line.
All profits in a Limited Liability Partnership (LLP) are split between the members. The tax liability falls on the individual members, not the LLP itself. Most members are likely to be self-employed, so all income should be declared via self-assessment. If an LLP member is another business, they will be liable to pay corporation tax on any income they receive from the LLP. As with other company structures, if the LLP is expecting to generate income in excess of the VAT threshold, they should register for VAT. If they have employees, the LLP should set up a PAYE system to collect income tax and National Insurance contributions.
A "nominated" member of the LLP will be responsible for informing HMRC of the LLP's existence, and for filling in the annual Partnership tax return. This return will also contain a "Partnership Statement" which shows how profits have been divided up amongst the members.
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