Formation of Scottish Limited Liability Partnership
A partnership is a simple and fast way to set up a business in the European Union. Scottish LLPs have high international prestige, no corporate (income) tax and no requirements to submit annual financial statements. Scottish LLPs are frequently used for international trade, asset protection, investments or holding company for private assets. Due to its separate legal personality and tax transparency it is worth to use Scottish LLP for tax structuring.
FACTS & INFO
A partnership is formed by two or more persons carrying on a business in common with a view of profit. The Partnership Act 1890, which still applies today, provides that a Scottish firm has separate legal personality from its partners, enabling it to enter into contracts and hold property in its own name. However, it should be noted that the partners of the firm are personally liable for the debts of the firm.
Limited Liability Partnership (LLP) is the latest business vehicle in the UK which was introduced on 6 April 2001 after the Limited Liability Partnerships Act 2000 received Royal Assent on 20 July 2000. The introduction date was used to coincide with the Inland Revenue tax year due to the way that LLP's are taxed. An LLP may be seen as a hybrid between limited liability companies and traditional partnerships, in that it offers the limited liability available to limited company shareholders combined with the tax regime and flexibility available to partnerships. Prior to this legislation, it was only a Private or Public Limited company that offered limited liability to all of its members. The key advantage of an LLP compared with a traditional partnership is that the members of the LLP (it is important that they should not be called partners but members) are able to limit their personal liability if something goes wrong with the business, in much the same way as shareholders in a limited company are able to.
Scottish LLPs must use the suffix Limited Liability Partnership or LLP to denote limited liability and can use any name unless it includes words such as Empire, Crown, Imperial, Windsor, Royal, Assurance, Bank, Building Society British, National, Great Britain, United Kingdom, England, English, Scotland, Scottish, Wales, Welsh, Ireland or Irish. The initials 'GB' or 'UK' do not require approval. 'European' - will not be approved if they imply unjustifiable connection with EU. 'International' - as prefix major activity must be overseas trading, as suffix, company activity must be in 2 or more overseas countries or any other words deemed sensitive or offensive.
An LLP should draw up a 'Deed of Partnership' at the time of formation - a legally binding agreement between members which lays out the rights and responsibilities of each party to the agreement. Alongside administrative details such as the names and addresses of members, the deed will also include details on the amount of capital each partner will inject into the business, what their individual roles and responsibilities will be in running the business and what would happen if a partner leaves the business.
Individuals or existing businesses can be members of a Limited Liability Partnership, and the LLP must have at least 2 members. The minimum capital contribution is £2. The rights and responsibilities of all members would usually be laid out in a 'Deed of Partnership'. Designated members have the same rights and duties towards the LLP as any other member. The LLP agreement and the general law governing these mutual rights and duties.
The LLP would typically select a 'Designated Member' (or members) who would be responsible for maintaining communications with the Companies House, preparing accounts and acting for the LLP if for some reason it is dissolved further down the line.
The members of an LLP are free to agree among themselves the relationship between them, rather as partners do in a partnership, the LLP itself is a separate legal entity, owned by the members. This means that the LLP is able to enter into contracts and hold property and the LLP is able to continue in existence independent of changes in membership. What is important is ensuring that the agreement between members addresses the issue of management, particularly as an LLP does not have to have a formal member’s agreement on creation.
There is no statutory requirement for a Company Secretary to be appointed.
Every LLP must have a registered office in Scotland, which is the address to which any formal communications may be sent. The LLP may change its registered office at any time by completing a special form, but the change only takes effect when it is registered at the Companies House. The registered office must be a physical location as people have the right to visit the office to inspect certain registers and other documents. They should also be able to deliver documents there by hand.
Company meetings need not be held in the UK or Scotland.
Incorporation time for a Scottish LLP is usually is 5 working days.
RECURRING AND MAINTENANCE FEE AS FROM 2ND YEAR
- Recurring Maintenance Fees as from 2nd Year - $600
- Provision of registered office
- Provision of company Secretary
- Preparing and Submission of Annual Return
The corporate (income) tax for LLP companies is zero. Each partner pays income tax separately, which depends on the state where a partner is registered as a taxpayer. LLP's are taxed quite differently from companies in that the profits are treated as personal income of the members as if they had run their business as a partnership. LLP's are tax transparent for Scotland purposes. For LLPs which have no business activities in the UK, do not derive any income from UK sources, and are managed and controlled by members who are not UK residents, members are not regarded as residents for tax purposes in the UK and therefore are not entitled to take advantage of international Double Taxation agreements concluded by the UK with other countries.
AUDIT AND FINANCIAL RETURNS
LLP's must produce and publish financial accounts with a similar level of detail to a similar sized limited company and will have to submit accounts and an annual return to the Companies House each year. This publication requirement is far more demanding than the position for normal partnerships and some specific accounting rules may lead to different profits from those of a normal partnership. The legislation also requires that the profit share of the highest earning member is published if the LLP's profits exceed £200,000. A further tax consideration arises in respect of overseas operations. A 'nominated' member of the LLP will be responsible for informing the Inland Revenue of the LLP's existence and for filling in the annual Partnership tax return. This return will also contain a 'Partnership Statement' which shows how profits have been divided up amongst the members.
Our Services & Requirements
OUR SERVICES FOR THE COMPANY FORMATION IN SCOTLAND INCLUDE:
- Name check and approval
- Filling the incorporation documents with Companies House
- A standard set of original corporate documents
- Payment of the Government Fee
- Provision of registered office and registered address for one year
- Provision of company Secretary for one year
- Rubber stamp
Please note: If applying for a corporate bank account outside of the UK you will need to order a full set of apostilled company documents.
DOCUMENTS REQUIRED FOR THE COMPANY FORMATION
Please provide the following documents for all Directors, Shareholders, Beneficial Owners, Authorized Signatories:
- Notarized copy of valid passport.
- Original or Certified copy of utility bill / bank statement (as verification of residential address, dated within 3 months).
- Original or certified copy of Banker’s reference letter (dated within 3 months).
- In cases where shareholders and/or directors are corporate bodies, full apostilled set of corporate documents and Certificate of Good Standing (for companies registered more than 1 year).
IMPORTANT NOTE: LICENSABLE BUSINESS ACTIVITIES
If you conduct any activity without required license or authorization granted by a relevant authority in any jurisdiction, STARTING BUSINESS will not be able to assist you with the company formation or bank account opening related to such unlicensed activity.
Licensable activities include, but not limited to: provision of financial services involving trading/brokerage in foreign exchange, financial and commodity-based derivative instruments and other securities; offering investment advice to public; insurance and banking business; operation and administration of collective investment schemes and mutual funds; payment processing services; money exchange, money transmission or money brokering; asset management; safe custody services; gaming, gambling and lotteries.
Please contact us if you need our assistance in licensing of your financial, Forex brokerage or gambling company.
Shipping of corporate documents or banking kits to your destination requires an extra charge and will be automatically added to your order during checkout. Shipping costs for international courier services are set automatically depending on geographic zones.