How to manage partnership and LLP accounts
Whether your business is a regular partnership or an LLP will have an effect on how you must disclose the financial details of your business. While many businesses are attracted to the idea of an LLP, note that filing LLP accounts can be more complicated than for a general partnership.
Simply put, a general partnership does not need to file annual accounts. On the other hand, LLPs must file certain information with Companies House. Indeed, an LLP is subject to a similar filing regime to companies in relation to trading disclosures and filing obligations.
What Limited Liability Partnership accounts should show
There are several elements that must be dealt with each time an LLP files its accounts. Chief among these is a full profit and loss account, including a statement of total recognised gains and losses.
A cash flow statement and balance sheet must also be present, as well as a members’ report that states their responsibilities when it comes the production of financial statements.
Filing the Limited Liability Partnership accounts, and the annual return, are the responsibility of the designated member – there will be at least two designated members in each LLP as determined in the LLP agreement.
It is vital that the LLP accounts that are filed are accurate and honest. Failure to keep proper accounting records, or failure to prepare and file accounts or returns with Companies House, can leave you subject to penalties just like a limited company. Meanwhile if the LLP faces insolvency, these failings can be deemed misconduct, which can have serious consequences for your career.
General partner accounts considerations
Of course, while general partnership accounts do not need to be sent to Companies House, they can be subject to the same level of scrutiny and have equally serious repercussions if they are incomplete or inaccurate.
A general partnership will need to choose a nominated partner, who keeps the business records in order and files the annual self-assessment tax return for the partnership. Each of the partners will also need to register for personal self-assessment.
Meanwhile, an accurate capital account will be vital if one of the partners retires â€“ determining what undrawn profits and balance the retiring partner is entitled to.
Ask Ralli for accounts advice
This is clearly a very complicated area of law, particularly for new businesses. If you are unsure what your business should be doing to comply with these regulations, Ralli’s experienced partnership law solicitors can help clarify any partnership tax issues for you with our expert advice.
Once your responsibilities have been established, our team can help you put systems in place that will ensure your accounts are filed when they should be, and also contain all the details required.
Contact Ralli Partnership Law by using the form on our site or calling 0161 832 6131 today.Back to our services