Does advice on avoiding being a sole trader/LLP apply to consulting partnerships?

[Abbot]

I set up a company recently to do small pieces of work. If you do your research then it isn’t hard to do all the statutory and admin work yourself. Like Eek said, mettle bank account gets you access to accounting software. Alternatively, use a free bank account and then chose a cheap accountancy software that can do your filing.

[jayn200]

I would get a company up as soon as you are starting to incur expenses or try to get some revenue. If that's right away then start one right away. I wouldn't run any transactions through partnership or as sole trader personally ( I have in the past ).

If you want it to be a real business you need to treat it like one from the start. There is a mentality thing there that may not be tangible but it's important.

[wavelette]

I would get a company up as soon as you are starting to incur expenses or try to get some revenue. If that's right away then start one right away. I wouldn't run any transactions through partnership or as sole trader personally ( I have in the past ).

If you want it to be a real business you need to treat it like one from the start. There is a mentality thing there that may not be tangible but it's important.

Thanks, is your reasoning mainly about the mentality (which I agree with), or were there also some practical considerations that caused trouble in your experience?

[Noiro]

I ran my Plan B as an unincorporated partnership for a while. Aside from allowing me to get up and running without the minor hassle of setting up a LTD there's no benefits and plenty of drawbacks. I wouldn't do it again like that.

- No bank would work with us without being incorporated, so I had to use a personal account for banking.
- No way to manage the profits in a tax efficient way. Partnership returns go in with SA1 and you're paying personal income tax on the profits each year.
- Annual returns accounting is actually surprisingly complicated I found (unless you set up the partnership tax year to align to personal tax year, which I didn't!)

Only positive point is that it was no trouble setting up VAT registration for the partnership, but that's no different to a LTD so not a plus in favour of the unincorporated partnership / sole trader model.

Transition to a LTD was however painless and an accountant had no difficulty working out the transfer of the assets into the new LTD when the time came.

[BlasterBates]

Is there any point to setting up a company if there's no revenue and no investment? If you invest in the partnership to simply pay yourselves then will incur accountant's fees and possibly an unnecessary tax bill. I would transform this into a company when there's revenue.