Which is cheaper to set up — Ltd or LLP?
LLP registration is slightly cheaper at £10 online versus £12 for Ltd. The real cost difference lies in ongoing accounting and tax compliance requirements.
Before you form
UK Ltd vs LLP — which structure is right for you?
A side-by-side comparison of the two most common UK structures for small businesses and freelancers: Private Limited Company (Ltd) and Limited Liability Partnership (LLP).
Full comparison
| Feature | Ltd | LLP |
|---|---|---|
| Official name | Private Limited Company (Ltd) | Limited Liability Partnership (LLP) |
| Legal structure | Separate legal entity from its owners (company) | Separate legal entity from its partners |
| Minimum members | At least one subscriber (director) | Minimum of two designated members |
| Liability | Limited to shares or guarantees held by members | Limited to each partner's capital contribution |
| Taxation | Corporation Tax on profits + Income Tax on salaries/dividends | No partnership-level tax — profits allocated to partners and taxed as personal income |
| Incorporation cost | Companies House fee — £12 online | Companies House fee — £10 online |
| Annual compliance | Annual Confirmation Statement + accounts filing | Annual Confirmation Statement + accounts filing |
| Company name requirements | Must end with 'Limited' or 'Ltd' | Must end with 'Limited Liability Partnership' or 'LLP' |
| Directors | Directors responsible for managing the company | No directors — partners manage the LLP collectively |
| Banking | Business bank account in the company name | Business bank account in the LLP name |
| Employment | Can employ staff directly | Can employ staff directly |
Best for — Ltd
- ✓Solo founders who want limited liability with a single director
- ✓Businesses that plan to retain and reinvest profits in the company
- ✓Founders who want to pay themselves through dividends
- ✓Companies that need to issue shares to investors
Best for — LLP
- ✓Professional partnerships (lawyers, accountants, consultants)
- ✓Two or more founders who want equal management rights
- ✓Businesses that distribute most profits annually to members
- ✓Founders who prefer to avoid Corporation Tax at entity level
Questions about choosing between Ltd and LLP
Why is an LLP taxed differently?
An LLP is not a separate taxpayer — each partner pays Income Tax on their share of profits. A Ltd pays Corporation Tax on profits, and shareholders then pay Income Tax on salaries or dividends.
Can non-residents form an Ltd or LLP in the UK?
Yes — both structures are open to non-residents. You can register a company or LLP through an authorised agent like Eteform without living in the UK.
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