Benefits of becoming an LLP
Limited liability partnerships have now been around for some seven years.
Many partnerships have converted, as we ourselves have just done, and new start-ups are increasingly opting for the flexibility of LLP status.
An LLP is something of a ‘hybrid’, combining aspects of a traditional partnership and a company. As a result, it can be seen as something of a win-win, offering advantages over both of these more traditional business vehicles.
LLP status offers all the benefits of limited liability. The position is very similar to that of holding shares in a company – the LLP member potentially risks his investment becoming worthless but does not risk losing his personal assets. Although there are some potential inroads into this concept (eg certain aspects of insolvency legislation in relation to LLPs) the position is far more palatable than that of unlimited personal liability within a traditional partnership.
One of the practical benefits is that, as a separate legal ‘person’, there is no need for business assets to be transferred when members retire or join the LLP. An LLP also has unlimited legal capacity so, unlike companies, there are no technical concerns about whether a particular legal transaction is within its powers.
LLP status also offers organisational flexibility, allowing management or profit structures to be created as you wish, with no need to distinguish between members and shareholders as required with a limited company.
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