LLP And LTD In The UK

Opening a company in the UK is beneficial in terms of tax optimization and the use of international payment systems. However, for it to flourish, it is necessary to know the peculiarities of the local economy. First of all, before registering a business, you should think about choosing the legal form of the company. If you are wondering how to change your business mailing address for a new form of business organisation and want to know more about the difference between LLP and LTD, this article is for you.

Advantages of Opening a Company In The UK

The process of registering a company in the UK is carried out online and does not require much time. Even a cursory review will allow you to understand the main advantages:

• The minimum speed for registering an international company. Registration in England takes place as soon as possible: within a few days from the date of submission of all documents, information about the registered company is entered into the register of the Registration Chamber;
• Respectability;
• No requirements for payment of the authorised capital;
• Possibility of remote registration and management;
• Loyal requirements for the composition of shareholders and directors (their functions can be performed by the same person – an individual or a legal entity);
• Use of nominal service is allowed;
• Ownership confidentiality. Relevant for those beneficiaries who wish to maintain / significantly increase the confidentiality of their business;
• Lack of currency control;
• No requirements for the citizenship of directors and the frequency of holding meetings of shareholders;
• Stable tax system and economic and political situation in the country;
• Minimal government intervention and ease of doing business. You may also be eligible for government support;

When registering a company by a non-resident and conducting business outside of England, the company is not subject to corporate tax.

What Are LPs And LLPs?

An LP or limited partnership in the UK is not a legal entity (with the exception of Scotland), but can be engaged in business activities, receive international payments, etc. It is often used in investment fund structures or in small projects. LPs are not subject to mandatory financial reporting requirements.

LP members are at least two partners – general (bearing full responsibility for the obligations of the partnership) and “limited” (responsibility is determined by the amount of the contribution). They can be both individuals and legal entities, both residents and non-residents.

In an LP, only the general partner can manage the business.

LP as a form of organisation is one of the riskiest business models in the UK: LP partners are personally liable for the company’s possible debts.

A Limited Liability Partnership (LLP) has the status of a legal entity and is a popular option for setting up a business in the United Kingdom.

At least 2 partners are required to open an LLP. They can also be both individuals and legal entities, regardless of citizenship and place of residence. They run the business and manage the property. Their liability, as a rule, is limited depending on the ratio of shares.

What Is LTD?

A limited liability company (LTD) is the most popular business structure in the UK. Whatever happens to the company, business owners can be sure that their assets are fully protected.

LTD Features:

• The limited liability company is a UK-resident legal entity and assumes all tax obligations.
• There are no requirements for the size of the authorised capital of LTD.
• An office in the UK is required.
• Shareholders of the company can be both residents and foreign citizens or legal entities.
• The LTD management team should include a director (only an individual) of any residency, a secretary (at the request of the founder), and at least one shareholder.
• Companies are required to submit annual financial statements.

Establishing an LTD can enhance the prestige and credibility of a business. This is due to the fact that such companies are better controlled than other structures due to the established obligations and reporting requirements. LTD is easier to get financing from banks and private investors.

The creation of LTD guarantees a favourable tax regime with the payment of 19% corporate income tax.

What do you need to register an LTD? Everything is very simple:

• Legal address in the UK;
• One director (or more);
• Shareholders (the function of a shareholder can be performed by a director);
• The authorised capital is not established (usually it is conditional, from £1);
• An indication of the prefix “LTD” in the official name of the company. It should be borne in mind that it is forbidden to use the words: Imperial, Empire, National, Royal, European (if the EU is not meant), etc.;
• Support from experienced professionals.

What to Choose to Start a Business: LLP Or LTD?

The main difference between partnerships and limited liability companies is taxation. LPP (LP) members pay income tax in their country of incorporation, while LTDs are subject to UK corporation tax.

In addition, limited liability companies are often considered more attractive in terms of financial investments. Investors can buy LTD shares without being a member of its management. In order to invest in an LLP, you will have to become a member of the partnership.

Both LLPs and limited liability companies are well-known and widely used business structures in the UK. When comparing them, it’s important to consider what works best for your business. Before deciding on the most appropriate organisational and legal form, it is necessary to obtain detailed advice from specialists.

Final Thoughts

The UK is known as an international business hub, which can elevate your brand profile and facilitate international expansion. If you are planning to start a business in the UK or want to make adjustments to your existing business and change your business mailing address, we recommend that you contact Hoxtonmix specialists. The specialists of this company will help you find the perfect mailing address for your business and provide many useful services, such as receiving and forwarding correspondence, answering calls, etc.