structure for growth?

[contactdiscuss]

Hi,

Hope you can help answer the below

We are looking to setup a new company or LLP partnership in order to bring together a recent startup which has around 15 staff and 3 existing contractors to form a NewCo. We have all previously worked in the same company and are keen to find a way to work together again.

We are looking to setup a company structure which will allow us all to work together to grow the business.

We have looked at the following.

1. Form a new LLP in order to bring existing contracts together in one entity but existing startup stays as is as one part of the firm. How do we avoid internal negative competition in terms of each partner just looking to grow there own area and profit share to take account of what each part is bringing to the table. I.e. the case wherell efforts go into existing startup rather than larger combined entity.

2. Expand and dilute existing Ltd company which has 15 staff and find a way to allow future partners to come on board to expand also.

Keen to keep the following in mind.

1. Ensure we are setup in order to accelerate growth.

2. Balance the current worth of contracs Vs. Future Value we want to achieve and have a balance of fairness in terms of profit sharing or setting of equity.

3. Allow expansion of firm by adding new partners who could be in in incentivised to grow the firm

Thanks in advance for your comments.

[northernladuk]

We have had a question more or less the same as this awhile ago discussed at length.. My initial thoughts are you are focussing on the wrong thing. What do your customers want and what can you offer with your current set up. No point structuring the company if you don't know what your offering and client base is.

Apologies if you already have this covered.

P.s. Get rid of the contractors. Overpaid lazy set they are....

[THEPUMA]

Hi

I would say that the answer is most likely an LLP. Simplistically, this is on the basis that if you are a limited company, every time you want to bring in a new partner, they will have to pay market value for their shares or be taxed on the market value.

This is why most professional firms (lawyers, accountants, suvrveyors, architects, etc) are traditionally set up as partnerships (limited liability or otherwise).

The downside to a partnership or LLP is that it is less tax-efficient than a company. For this and other reasons, we have therefore set up several hybrid structures for clients eg an LLP whose partners are a combination of individuals and limited companies.

A difficulty you will face is that your business currently trading through a limited company so you will need to be very careful when transitioning this across to an LLP. In fact, I have just been through exactly this scenario with one of my clients.

Mod snip: How about [email protected] for your login then?

[THEPUMA]

Mod snip: How about [email protected] for your login then?

I've been on here for years as THEPUMA so I think I'll stay as I am, thanks.

[cojak]

Then you'll know all about the T&Cs of the forums..

[THEPUMA]

Then you'll know all about the T&Cs of the forums..

If I'm honest, I'm not a regular reader of bulletin board T&Cs.

[contactdiscuss]

Thanks for feedback - yes that is covered and is a key part why we all want to work together and have a single/joint offering as a firm rather than as individuals - just trying to ask more around the legal setup and dont want to start off on the wrong foot so to speak and see how others structure themselves.

We have had a question more or less the same as this awhile ago discussed at length.. My initial thoughts are you are focussing on the wrong thing. What do your customers want and what can you offer with your current set up. No point structuring the company if you don't know what your offering and client base is.

Apologies if you already have this covered.

P.s. Get rid of the contractors. Overpaid lazy set they are....