If you are combining capital and expertise with one or more people, you may wish to form a partnership. A traditional partnership is governed by the Partnership Act 1890, which doesn’t completely cover the modern alliance, so it is important to have a detailed Partnership Agreement drawn up which sets out matters such as;
- the division of profits
- duties, and responsibilities of each partner
- what happens if one partner resigns or retires
- dispute resolution
Limited Liability Partnership (LLP) is a business structure often used by professionals such as lawyers, accountants, architects, engineers etc. The main difference between a traditional partnership and an LLP is that each partners’ liability is limited. Every LLP must file accounts with Companies House, and these will be publicly available.
LLPs are governed by the Limited Liability Partnership Act 2000; however, partners can draw up an agreement which covers aspects of the partnership such as profit sharing, management of the business, and the appointment of new partners.
Limited Liability Company
Creating a Limited Liability Company (company) is a straightforward way to start a new business. You need to choose a company name and file a series of documents with Companies House, including;
- Form IN01 (which provides information as to the company name, the names of the initial directors and company secretary, and the identities of the shareholders)
- Memorandum of Association
- Articles of Association
The advantages of setting up a limited company include:
- you may pay less tax than a sole trader
- a limited company is a separate legal entity which can enter into contracts and loan agreements which limits your personal liability
- as your business grows, further shareholders can invest, and different types of share classes can be created, limiting the rights attached to shares – this is important if you are seeking private investment
As with an LLP, with a Limited Company will need to file annual accounts with Companies House and these will be available to the public.
Getting the right structure for your new business idea from the outset is critical, ensuring you have the right level of business support to get you in the best shape.
As a new small business owner, expert advice to help you decide on the best structure of your start-up will provide you with the confidence that you are fully aligned with your business plan and goals.
Next Steps
If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com.
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
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