Anyone for LLP

[Edt]

I'm having second thoughts about continuing to run a ltd company just for me. My idea is a dozen contractors sharing an LLP and having our own tame recruitment person to find us work and carry coffe or anything else we order.
As far as I can see it should be the safest and most efficient approach to IR35 etc.
What do you think guys?

[Sockpuppet]

Wouldnt you all have to earn to same to make paying dividends possible?

You all going to have the same level of authority in the company? It wont last a week.

[malvolio]

Bad, bad idea. Quite part from it having no impact on IR35 (a per person, per contract deal, remember?), doing it safely and taking out proportionate earnings is a nightmare. The recruiter will cost you £70k including overheads if you want someone who can actually do the job, and he still won't guarantee any income as a result.

Do it if you are very brave, have a group of acquiescent friends and can afford to lose everything you put in. It may well work, but if it doesn't...

[XLMonkey]

Oh, I don't know. There are some pretty successful organisations that have done that in the past: Deloitte's, PA, McKinsey. Sounds like the business model in use by virtually every management consultancy that was ever worth the name.

But, it has nack all to do with IR35, and normally the partners also have to do all the sales/agency work at the same time.

Got a friend of mine who is trying to build a little consultancy firm along these lines: getting there, but its a long old slog (3-5 years before it is likely to be much more than a bunch of mates looking out for each other)

[tim123]

Oh, I don't know. There are some pretty successful organisations that have done that in the past: Deloitte's, PA, McKinsey. Sounds like the business model in use by virtually every management consultancy that was ever worth the name.

Many of these started out with the sales person taking the same risk as everyone else.

tim

[Edt]

interesting comments

I apreciate the comment that you can't simply work with anyone and you need to plan carefully for how pay is done. I really don't think either of these is a big challenge. It's no different to building a good project team. I know a number of lawyers and accontants who can easily sort out the legal and pay issues. Do remember that this is exactly how enlightened accountants and lawyers are working as well as the likes of KPMG. Are they working for umbrellas and pimps?
I think not.
12 contractors working full time should bring in about 1 million a year, that's nearly £200,000 the pimps wouldn't be getting. How much can you sell a consultancy firm for with earnings of 1m p.a. And what about all the other work everyone stumbled into. We could employ people to do that.
I think it's not for anyone who wants an easy life, but then rewards never were easy.
I'm still examining the angles though.


Ed

[boredsenseless]

I apreciate the comment that you can't simply work with anyone and you need to plan carefully for how pay is done. I really don't think either of these is a big challenge. It's no different to building a good project team. I know a number of lawyers and accontants who can easily sort out the legal and pay issues. Do remember that this is exactly how enlightened accountants and lawyers are working as well as the likes of KPMG. Are they working for umbrellas and pimps?
I think not.
12 contractors working full time should bring in about 1 million a year, that's nearly £200,000 the pimps wouldn't be getting. How much can you sell a consultancy firm for with earnings of 1m p.a. And what about all the other work everyone stumbled into. We could employ people to do that.
I think it's not for anyone who wants an easy life, but then rewards never were easy.
I'm still examining the angles though.


Ed

Firstly if you are the company, then 1 million a year for 12 consultants sounds light, 1.5 is more like it.

Selling it is a different matter, I personally wouldn't give you 5p for a 12 man band who earnt 1.5 mill last year. I would however give you something for the unearned value in your recurring contracts, and if it could be shown you had some heavyweight repeat customers (i.e. you've worked with them consistently for 3 or more years) then the goodwill may be worth something.

Back in the glory days a consultancy team would be 'valued' (not necessarily sold for) 8 times turnover (back in the days when consulting was like prinitng money now its more like recycling it, its still profitable just not quite as good). Nowadays if you meet the conditions above I guess you could get somewhere between 0.8 to 1.5 times turnover depending on debt and retained funds. However if you haven't got the staff handcuffed and the contracts running for a significant length you are likely to the square root of FA.