What is a Limited Liability Partnership (LLP)?

An LLP is a separate legal entity, meaning it can enter contracts, own property, and take on debts in its own name, not in the names of individual partners.

Each partner shares in:

• The profits

• The decision-making

• The responsibilities of running the business

But crucially, their personal assets are usually not at risk if the LLP runs into financial trouble, unless they’ve acted negligently or given a personal guarantee (see liability article linked below).

An LLP must have at least two members (also known as partners). These can be:

• Individuals

• Companies (known as corporate members)

There’s no upper limit on the number of partners you can have.

LLPs must have at least two designated members at all times. These partners take on extra legal duties, including:

• Registering the LLP with Companies House

• Filing annual accounts and confirmation statements

• Ensuring the LLP follows proper processes if it closes or becomes insolvent

If designated members don’t carry out these responsibilities, they can face fines or even prosecution.

📚 Need more detail? Read our in-depth guide to LLP partner liability here →

While LLPs offer flexibility, they are still regulated under UK company law. Key requirements include:

• Registering with Companies House

• Creating an LLP agreement (not legally required but strongly advised)

• Filing annual accounts and tax returns

• Paying taxes on partner profits individually (LLPs are tax transparent)

Limited Liability
Protects partners’ personal assets if the LLP becomes insolvent (except in cases of misconduct).

Flexible Profit Distribution
Profits can be divided in any way agreed upon in the LLP agreement—there’s no fixed share requirement.

Separate Legal Entity
The LLP can own property, sue, and be sued in its own name.

Tax Efficiency
LLPs don’t pay corporation tax; each member pays income tax on their share of profits.

More Admin Than a Sole Trader
Annual accounts and confirmation statements must be filed with Companies House.

Public Disclosure
LLPs must publish financial information, which becomes part of the public record.

Limited Investment Options
LLPs can’t issue shares, which may limit access to external investment.

Joint Responsibility for Decisions
Unless clearly defined in your LLP agreement, decision-making can become difficult in disputes.

If an LLP cannot meet its financial obligations, it may need to consider:

• Liquidation (CVL)

• Administration

• Company Voluntary Arrangement (CVA)

Partners are usually not personally liable unless they’ve acted wrongfully or given personal guarantees.

For a breakdown of partner liability during financial distress, see our detailed article:

👉 LLP Partner Liability Explained →

An LLP can be ideal for:

• Professional firms (legal, finance, architecture, etc.)

• Business partnerships that want limited liability

• Companies with multiple owners who don’t want a rigid share structure

But it’s not for everyone. If you need outside investment or want to issue shares, a limited company might be a better fit.

• LLPs combine limited liability with the flexibility of a partnership

• At least two members are required (individuals or companies)

• Designated members have specific legal duties

• All profits are taxed via self-assessment, not corporation tax

• Filing and compliance duties are similar to limited companies