Partnerships are perhaps the oldest form of business entity in the UK and, whilst they have become less popular in recent years, the degree of privacy they afford and their tax transparency make them an attractive option still for some. It is important for any partnership to have a well-drafted partnership agreement to deal with the control of the partnership’s business, how the partnership’s assets, profits and losses are shared, how new partners may be brought on-board and how the partnership may be dissolved. We are well-experienced in drafting partnership agreements.
LLPs (Limited Liability Partnerships) have over-taken the partnership as a business model in recent years as they provide the same tax transparency as a partnership, but resolve its one major weakness by affording the LLP a separate legal personality (just as for a company) so that the LLP’s losses sit with the LLP and are not passed on to the members (partners). The Limited Liability Partnership Act 2000 provides a default agreement for LLPs which stipulates that all profits and management of the LLP are shared equally unless the members otherwise agree (in writing) . If this is not appropriate for your business, we would be happy to draft a bespoke LLP Agreement to govern how your LLP should operate.
Many professional partnerships (including law firms) have converted to LLPs to take advantage of the protection of a separate legal personality, and we are also able to assist you with converting your existing partnership into an LLP.