LLP member with 100% profits

[Ruddles]

Jurisdiction

United Kingdom

Can profits of a 2-member partnership, particularly an LLP, be allocated in full to one member? Or does member 2 need to have a nominal share say, 0.1%, to demonstrate the existence of a partnership (ie 2 or more persons acting together with a view to making a profit)?

 

[army judge]

Can profits of a 2-member partnership, particularly an LLP, be allocated in full to one member?

Generally, anything and everything is possible. Unexplained events and/or outcomes transpire regularly. The answer you seek might be found upon reviewing the existing written partnership agreement and other attendant documents.

There is no way uninformed, anonymous internet denizens could reliably answer any questions relative to your partnership agreement.

Or does member 2 need to have a nominal share say, 0.1%, to demonstrate the existence of a partnership (ie 2 or more persons acting together with a view to making a profit)?

Generally, anything and everything is possible. Unexplained events and/or outcomes transpire regularly. The answer you seek might be found upon reviewing the existing written partnership agreement and other attendant documents.

There is no way uninformed, anonymous internet denizens could reliably answer any questions relative to your partnership agreement.

By the way, there are no responders participating on this site knowledgeable in the laws of the United Kingdom.

These websites might have knowledge about laws in the United Kingdom:

Legal Beagle

Crime, justice and the law - GOV.UK

https://legal.feedspot.com/uk_law_blogs/

https://www.similarweb.com/top-websites/united-kingdom/law-and-government/legal/

https://uk.practicallaw.thomsonreut...efault)&transitionType=Default&firstPage=true

 

[Zigner]

Can profits of a 2-member partnership, particularly an LLP, be allocated in full to one member? Or does member 2 need to have a nominal share say, 0.1%, to demonstrate the existence of a partnership (ie 2 or more persons acting together with a view to making a profit)?

Sorry - this forum is for US law matters.

 

[Tax Counsel]

Can profits of a 2-member partnership, particularly an LLP, be allocated in full to one member? Or does member 2 need to have a nominal share say, 0.1%, to demonstrate the existence of a partnership (ie 2 or more persons acting together with a view to making a profit)?

How is it a partnership if only one member benefits? If the goal is for only one person to control the LLP then the usual approach to that is to form a second entity owned by the individual that then is a partner in the LLP. For example, John might form John's Holding Company LLC, of which he owns all the member interests, and then John's holding might own, say, 10% John's Business LLP with John directly holding the rest. For federal tax purposes that set up would end up being treated as a sole proprietorship of John.

However, if it's really going to be just a one person show, why the desire to have a LLP instead of a LLC? John would get the same legal and tax results simply forming a one member LLC, simplifying matters and creating less expense.

If you've not discussed your plans with a business law attorney and a business tax law professional then I recommend you do that before you start setting up entities for your business. Going it alone without full knowledge of the relevant business entity laws and the applicable tax laws risks making costly mistakes. While my answer is written in terms of U.S. law, similar set ups may be done in the UK, too. Whether in the U.S. or the U.K., you need to understand all the legal and tax effects of whatever structure you are considering using.