What Is a Limited Liability Partnership? The Pros and Cons Explained
LLP | Limited Company (Ltd) | |
|---|---|---|
Legal status | Separate legal entity | Separate legal entity |
Ownership | Owned by members | Owned by shareholders |
Management | Managed by members | Managed by directors |
Tax treatment | Profits taxed individually as Income Tax | Company pays Corporation Tax; shareholders taxed on dividends |
Profit distribution | Allocated according to LLP agreement | Dividends distributed to shareholders |
National Insurance | Individual members pay NICs | Directors may structure remuneration (salary/dividends) |
Reinvestment of profits | Members taxed on profit share whether withdrawn or not | Profits retained in company taxed at Corporation Tax rate |
Investor suitability | Less suited to external investors | Easier to issue shares and attract investment |
Perception | Common for professional partnerships | Common for trading companies and startups |