LTD vs LLP vs other

[ollya]

HI all,

I'm looking for some suggestions of areas that I should investigate further with regards to a new venture I am starting and how to structure it please.

There are two partners (myself and a colleague) both who operate our own ltd companies.

Options are:
1. new ltd company - each of our existing companies are equal share holders
2. new ltd company - each of us are equal share holders individually
3. llp with each of our companies as equal share holders.

My aim is to choose the option that is:
1. most flexible for future changes i.e. one partner needs to draw more than the other
2. maximise tax benefits.

So far option 2 has been recommended by my accountant.

Any suggestions / comments greatly appreciated.

Oliver

 

[BTC1812]

Looking at you options 1 and 3 are the same thing 3 as the preferable since LLP’s are good joint venture vehicles for corporates

However when you state that your aim is to choose the option that is most flexible for future changes i.e. one partner needs to draw more than the other to maximise tax benefits, these options do not work unless something is done the same applies to option two.

The only ways to vary the amount of profit extraction form a fixed shareholding is either by dividend waiver or what has been deemed as alphabet shares with the rights of directors declare different dividends to different classed of shares, WARNING can be viewed as disguised remuneration by HMRC and net dividends charged as net pay therefore PAYE and NIC chargeable on the company.

 

[ollya]

Thanks for the explanation Steve, much appreciated.

Based on what you said, if all I am aiming to do is maximise the tax benefits, are there any reasons to go with option 1 over 2?

I had assumed it was the case as otherwise why would so many holing companies exist.

Thanks,

Oliver

 

[Johnny Martin]

This is an area you do need to take advice from an expert - but you should be thinking perhaps about the structure when you want to sell. If your new business is distinct from your other business, I would keep it in a seperate vehicle without Ltd Company shareholders. Plus you then would be eligible for entrepreneur relief on sale - but I am not a tax expert. As Fincial fitness Coach for Intuit - do keep it simple, dont go for over complicated tax saving. If you need to find an accountant to discuss this with try a QuickBooks ProAdvisor which you can find on our website http://www.intuit.co.uk/quickbooks-...ccountants/find-a-local-quickbooks-expert.jsp

 

[Qualitas Payroll Services]

Worth keeping in mind that with (1), if either of your parent companies enter difficulties then the assets of your join venture will be at risk.