Limited Liability Partnership (LLP)

UK Limited Liability Partnerships

In the UK, an LLP functions much in the same ways as US Limited Liability Company (LLC). Despite the name, UK LLPs are specifically legislated as a corporate body rather than a partnership - that is to say, it has a continuing legal existence independent of its members, as compared to a partnership which may (in England and Wales they do not) have a legal existence dependent upon its membership.

A UK LLP is tax transparent or pass-through for UK tax purposes, that is to say it pays no tax but its members do in relation to the income or gains they receive through the LLP.

A UK LLP's members have a collective responsibility, but no individual responsibility for each other's actions. As with a limited company or a corporation, members in an LLP cannot, in the absence of fraud or wrongful trading, lose more than they invest.

Limited Liability Partnerships in the US

A limited liability partnership is a vehicle intended for professional firms (such as accountants and attorneys) in which all partners may be involved in management but the partnership as a whole has a stated paid up capital, against which creditors may mount an action. All partners have a form of limited liability, similar to that of the shareholders of a corporation. However, the partners have the right to manage the business directly, and (in many areas) a different level of tax liability than in a corporation. It should be noted that in a limited liability partnership there is no limit in respect of claims of negligence against individual partnership members but the claim against the whole partnership would ipso facto be of a defined maximum amount.