Limited partnership Vs limited liability partnership
Your liability for business debt differs depending on
whether you’re a limited partnership or limited liability partnership (LLP).
You can share all the business’s profits between the partners. Each partner pays tax on their share of the profits.
Limited partnerships
The liability for debts that can’t be paid in a limited partnership is split among partners.
Partners’ responsibilities differ as follows:
- ‘general’ partners can be personally liable for all the partnerships’ debts
- ‘limited’ partners are only liable up to the amount they initially invest in the business
General partners are also responsible for managing the business.
Read more about Partnerships.
Limited liability partnerships (LLPs).
The partners in an LLP aren’t personally liable for debts the business can’t pay – their liability is limited to the amount of money they invest in the business.
Partners’ responsibilities and share of the profits are set out in an LLP agreement. ‘Designated members’ have extra responsibilities.
Tax for limited liability and limited partnerships
Every year, the partnership must send a Partnership Tax Return to HM Revenue and Customs (HMRC).
All the partners must:
- send there individual Self assessment tax returns every year
- pay Income Tax on their share of the partnership’s profits
- pay National Insurance
You must also register the partnership for VAT if you expect your business’s takings to be more than £81,000 a year.
If you need to speak to an Adviser, please contact us on 0208 679 4690 or need more information about your partnership, please Visit our website.
Categories: Taxes
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