One of the very first things that you will need to do when you decide to set up a limited company is to determine the legal structure of that company. Operating your business as a sole trader or partnership is a bit different than doing so as a limited company. Every business owner faces challenges so if you have decided to start up a limited liability partnership, there are a few things that you will want to keep in mind to ensure that your company opens and runs smoothly.
A limited liability partnership is a business that is operated with two or more partners or members. Every partner pays tax on his or her share of the company profits just like in an ordinary partnership. However, each partner in a limited liability partnership is exempt from any business liabilities or debts that the company cannot pay. This offers a major benefit over an ordinary partnership but again, there are things that you will need to keep in mind.
Once you have decided to start a limited liability partnership, you will need to choose a company name, obtain a registered office address and have at least two designed members or partners. You should draft a limited liability partnership agreement which will tell how the business is going to be operated. Once you have all of these in place, you can register your new partnership with Companies House. Remember that the regulations for setting up a limited liability partnership are a bit different than those for a regular partnership. Be sure that you check these rules to ensure that you have taken all of the necessary steps to start up your new company.
Your new company name must end in LLP or Limited Liability Partnership. You can choose either of these endings but you must have one of them at the end of your company name. You will also want to check the Companies House register to ensure that your new company name is available and that your chosen name is not too similar to any other names that are already registered.
Your LLP agreement should include details of how your company will be run. It should include how profits are going to be shared among members or partners, as well as the responsibilities of each member, how decisions are to be made and how members will be permitted to join or to leave the company. If you are unsure of how to draft this document, you can find templates online or you can work with a solicitor or a company formation agent.
Remember that you must also register your business for self assessment with HMRC. You have to register as an individual and you must register your partnership for VAT if you feel that your business sales will be more than £85,000 per year. You can do all of this yourself or with your partner or partners or you can choose to work with a solicitor or a company formation agent who can do all of the paperwork for you online.