New accounting practices outlined for LLPs

New accounting practices outlined for LLPs

The Consultative Committee of Accountancy Bodies (CCAB) has released the 2024 edition of its Statement of Recommended Practice Accounting (SORP) for Limited Liability Partnerships (LLPs).

CCAB is appointed by the Financial Reporting Council (FRC) to oversee the SORP for LLPs, ensuring that such businesses can present financial statements and accounts similar to those of other businesses, such as limited companies.

LLPs can present a challenge as they incorporate elements of limited companies and general partnerships.

Partners bear financial responsibility for the business, but only up to the value of the capital that they have contributed.

For this reason, CCAB regularly issues updated guidance for accounting rules for LLPs – with new rules applying to accounting periods (APs) beginning from 1 July 2024.

Remuneration changes

The most recent changes include guidance on sharing group profits and post-retirement payments for partnership members.

The latest SORP for LLPs dictates that, where an LLP has members who provide capital to the business, but where some do not provide ‘substantive services’ to the business, the automatic right to a share of the LLP’s profits should be treated as a return on capital – i.e. a share in future profits of the LLP.

Additionally, the SORP confirms that, if a former member is classed as an employee, post-retirement payments are covered by Section 28 of FRS 102.

It further outlines that LLP obligations towards members post-retirement are covered by FRS 102 and 103, including:

Reporting requirements

With regard to financial reporting, new disclosure requirements have been included in the latest SORP, particularly for notes to the accounts, which must include:

LLPs must also detail their policy for drawings on account and divisions of profit.

For further advice on accounting rules for LLPs, contact our team today to discuss your needs.

Cloud Accounting Experts

Xero Intuit QuickBooks Sage Dext

Latest Insights

Make an enquiry

Have a question? Contact us and a member of our team will get back to you.

If you would like to see full details of our data practices please visit our Privacy Policy and if you have any questions please email privacy@thomascoombs.com.

Awards and accreditations