LLP: Pros and Cons?

[SLB]

A bit off topic I know, but there are some wise heads on this thread so I hope you don’t mind if I ask if anyone knows anything about Limited Liability Partnership payment structures? What are the pros and cons of it all and any other useful info would be appreciated. Thanks!
SLB

Mod note: Moved from the NTRT thread.

[cojak]

A bit off topic I know, but there are some wise heads on this thread so I hope you don’t mind if I ask if anyone knows anything about Limited Liability Partnership payment structures? What are the pros and cons of it all and any other useful info would be appreciated. Thanks!
SLB

Unsupported Taxes

[Jessica@WhiteFieldTax]

"payment structures" is a rather ambiguous term? Can you clarify what you are actually asking?

LLPs are great in certain circumstances, but not in others. It all depends.

[Maslins]

Depends on your circumstances.

For your typical contractor, LLP makes no sense, Ltd Co is far better.

LLPs can be good if you want to be flexible on profit splits (ie year 1 60:40, year 2 70:30/whatever). Also there's a few clever things you can do with LLPs and corporate partners (ie one partner is a Ltd Co), but again, for your standard contractor this would be a complete waste of time and additional admin costs.

[TheFaQQer]

LLPs are great if you want all the tax breaks of being a partner in a huge accountancy like KPMG, but don't want to risk it all when your audits prove to be cack a la Arthur Andersen.

Another great New Labour idea - they also seem to be working quite well for a Mr T. Blair if Private Eye is to be believed.

[craig1]

A bit off topic I know, but there are some wise heads on this thread so I hope you don’t mind if I ask if anyone knows anything about Limited Liability Partnership payment structures? What are the pros and cons of it all and any other useful info would be appreciated. Thanks!
SLB

Mod note: Moved from the NTRT thread.

Depends why you're asking...

Option 1: If you're considering becoming a "partner" in a tax avoidance LLP run by someone else then read this post.

Option 2: If you're considering starting your own then still read that post but you get a lot more leeway because it's all yours. Your tax affairs, both business and personal, are substantially reduced. Your business tax affairs are VAT and an annual tax return that sets out how much of the firm's profit each of the LLP's members are responsible for. Your personal tax affairs are slightly simpler as you've no messing around with dividends. You're also moving away from many tax audit triggers. The downside is that you're very highly unlikely to be taking home more money than even a moderately well run Ltd company.

In a nutshell, you have to have a fairly good reason for going with an LLP and it's always best to take professional independent advice first.

[cojak]

And let's pull out the bit from Craig'ds post that is of most interest here...

I operate through an LLP and have done for many years. Suits me perfectly as my partner is my wife who is also a contractor! There are plenty of benefits of operating through an LLP (no PAYE, no Corp Tax, etc. meaning far fewer HMRC interactions!) but some drawbacks (I pay about 2-3% more tax than a typical contractor going through their own Ltd Co). Any tightly run LLP will net you far more than an umbrella, even a loosely run one means you have no employer's NI to pay.
...

[stek]

LLP: Pros and Cons?

I think the main benefit is that the money doesn't sit in a low interest business bank account, it more or less goes straight into your personal account.

[SueEllen]

I think the main benefit is that the money doesn't sit in a low interest business bank account, it more or less goes straight into your personal account.

There is nothing stopping the directors of the company agreeing that any funds not needed immediately should be moved to a higher paying notice account.

[captainham]

Potentially useful:

What is an LLP and what tax advantages does it have?

http://www.onlinetaxcalculators.co.u...Calculator.cfm