Benefits of going from Limited to Partnership status?

[rsole]

Does anyone know what the benefits of moving a (small) company from a limited status to a partnership are - and possibly the reasons why someone would consider this?

Thanks

[russy01]

Hate to be a scruge but I don't see an advantages, partnerships are hard to maintain. Relationships are torn by money!

[MondeoMan1981]

Weird one.

I deal with a lot of businesses in work and I've only seen one move from Ltd to Partnership and that was when the business had more or less wound down and the only income was property rental.

[Beardy10]

The big fiscal benefit is that the company doesn't pay employers National Insurance. Also as the law believes all partners are equal you lose virtually all your employment rights except age discrimination...so if they ever fire someone that's probably a fiscal benefit too.

If your employer wants to change to a partnership structure I would approach them and say that you don't really understand what the implications are and you would like to take legal advice and you would like them to pay for it. It's an entirely reasonable request. You'd need to find an employment lawyer that specialises in partnership law and who can highlight the differences between the two contracts. I used to work for a company that went through this change and to be honest we (i.e. the employees) were very against it because of the rights we were giving up to save the company money. We got the company to pay for legal advice for us as we refused to sign without it.

[Simpo Two]

Partnership - you can fall out, your partner does a runner with all the cash and you get the debts. 'Jointly and severally liable' and all that.

[Eric Mc]

None - from a tax point of view.

And I can't think of many for legal reasons either.

[Beardy10]

Simpo Two said:

Partnership - you can fall out, your partner does a runner with all the cash and you get the debts. 'Jointly and severally liable' and all that.

If it is an LLP (Limited Liability Partnership) that is not the case.

[Somewhatfoolish]

Why not do both if you reckon your accountant is looking hungry? Limited companies can be partners in LLPs as well as private individuals, so you can go into partnership with your limited and have lots of fun with paperwork.

[Beardy10]

The other thing to remember about partnerships is that as far as the tax man is concerned you are self employed, depending on what your job is that does obviously open up avenues for claiming some items against your tax bill.

[Simpo Two]

Beardy10 said:

If it is an LLP (Limited Liability Partnership) that is not the case.

That's the one firms of solcitors use - otherwise, if they fell out and all started suing each other it could be fun...

But is an LLP open to anyone?

[Eric Mc]

Beardy10 said:

The other thing to remember about partnerships is that as far as the tax man is concerned you are self employed, depending on what your job is that does obviously open up avenues for claiming some items against your tax bill.

No he doesn't. He applies the rules for taxing an individual who is a partner in a partnership. They are not quite the same.

[Beardy10]

Simpo Two said:

Beardy10 said:

If it is an LLP (Limited Liability Partnership) that is not the case.

That's the one firms of solcitors use - otherwise, if they fell out and all started suing each other it could be fun...

But is an LLP open to anyone?

LLP's are definitely open to companies other than accountants and solicitors. It's a complete farce as they can have different levels of partners e.g. A and B partners....the A partners being the ones that are the managers and the B partners being the foot soldiers. Then there can be a Committee above that. Depends how the company is structured in the partnership deed.

[Eric Mc]

LLPs were devised for entities which are precluded from operating as normal limited companies. Many professional bodies do not allow their members to operate through limited companies. The LLP was devised to provide limited liability to those types of businesses.