LTD or LLP

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Tithe Barn

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Sep 19, 2022
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  • #1
    We have two operating businesses, one a LTD company started 7 years ago the other a LLP acquired three years ago, as both business grow its becoming a chore to run different accounts, bank and accounting etc, plus profit is difficult to retain in an LLP.

    Any suggestions / advice on which is the best structure for a company which combined would T?O £ 1m
     
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    Ozzy

    Ozzy

    Founder of UKBF
    UKBF Staff
    • Feb 9, 2003
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    bdgroup.co.uk
  • #4
    As Limited liability is consistent between the two the main difference comes down to taxation, with a Ltd Co the company owners are taxed at source but with a LLP the "owners" are taxed individually.

    An accountant is the best person to walk you through this, but over simplifying it an LLP is a bit like a bunch of sole traders operating through an umbrella partnership. Typically the number of times an LLP is the best route is minimal, and usually comes down to property companies and professional service companies (like accountants and solicitors).

    Unless you are planning on getting a company car, if you plan on getting a company car then you aren't whacked as hard with BIK through an LLP.
     
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    eteb3

    Free Member
    • Jul 18, 2019
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  • #5
    Hope I can resurrect this thread.

    I'm interested to know why so few people use LLPs.

    Purely from a theoretical perspective they seem simpler to me:
    1. You don't have to double up with a shareholders' agreement and bolt that onto clunkier Articles
    2. There are far fewer surprises where the Companies Acts intervene across your agreement in ways you didn't expect.
    3. It's massively more flexible.

    It seems just about every small biz on here would be eligible, except sole shareholder-director, sole-employee companies (granted that's a big exception).

    Any ideas as to why? Thanks.
     
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    MBE2017

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    • Feb 16, 2017
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  • #6
    eteb3 said:
    It seems just about every small biz on here would be eligible, except sole shareholder-director, sole-employee companies (granted that's a big exception).

    Any ideas as to why? Thanks.
    Click to expand...

    It would be best to get qualified advice based on your own circumstances, however, a couple of negatives with LLP’s is you get taxed on any profits in that particular year, raising finance can be awkward for many as well, plus full disclosure on finances at companies house.

    You have mentioned a few advantage, so it comes down to individual circumstance. I also think the LLP is just less well known by many to begin with.
     
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