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13 December 2018 You are not logged in. Login now.

Starting a Limited Partnership

limited partnershipsWith the introduction of limited companies and LLP’s, limited partnerships are a less popular type of business structure. However, they are still preferred by some customers and provide a more formal structure than a general partnership.

A Limited Partnership must register with Companies House by filing the LP5 form. If your partnership is not registered with Companies House by completing the form then it is known as a general partnership.

Limited Partnerships consists of two types of partners, there must be a minimum of one general partner and one limited partner. The partners can be corporate entities (UK or Non-UK companies) or physical people. A ‘general partner’ is liable for all of the company debts and is responsible for running the day to day business of the partnership. A ‘limited partner’ contributes an amount of capital in the form of cash or property to the business. The liability of the limited partner is set at the value contributed when joining the partnership and they will not have to pay any further amount to debts of the business, they will simply loose the amount invested. For the limited partner to remain with limited liability they must not handle the day to day running of the company or they will incur the same liabilities as a general partner.

A partnership agreement is usually drafted and signed by the parties involved which acts as the governing document for the business entity. This sets out how the partnership will be managed and dictates anything from how to appoint a new member to how the partnership can be dissolved by the partners. It is recommended that you seek professional advice from a solicitor when drafting an agreement.

Depending on personal circumstances a Limited Partnership may be more tax efficient for some business owners. The partners are taxed on the individual profits they receive form the partnership rather than the partnership paying corporation tax in the same way a limited company does. A Limited Partnership is not suitable for every business and you may benefit from registering a company instead. We suggest seeking professional advice from a qualified accountancy firm if you are not sure which legal structure would suit your needs. Choosing the right business vehicle is an important decision.

If you need assistance registering a limited partnership please contact SFS for advice. We can assist with preparing the documentation and obtain the certificate of incorporation in just a few days. Many customers also choose our support services like our Scottish registered office or document legalisation.

About the Author Mike Harris:

Mike has been providing advice and support to companies for over 15 years through my company Small Firms Services Ltd. You can follow SFS and Mike on Google+ and also twitter