Why do LLP partners need to guarantee money?


I have been asked to become a partner at an LLP. As part of that, I’m assuming I must hand over a guarantee. Why? Can somebody else not do it?



LLP partners are not legally required to provide a personal financial guarantee unless it is stated in the partnership agreement as a prerequisite for membership. If you have been asked to provide one, this is likely the reason why. It’s probably not a large sum.

The guaranteed sum will be the limit of your personal liability for business debts. If the LLP is unable to pay its bills, you won’t have to contribute any more than the guaranteed sum. This is just part and parcel of joining a business that has limited liability, but it’s actually a good thing!

Most LLP members contribute capital when the business is first set up - this is usually the extent of their liability unless they also provide personal guarantees. If you are joining an LLP after its incorporation and do not contribute any capital, it is common to be asked to provide a guarantee instead.

2 years ago

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