Limited liability benefits for small businesses
Oct 15 2002
Small companies of any size could gain tax benefits from forming a Limited Liability Partnership (LLP) says accountancy firm Baker Tilly.
George Bull, at Baker Tilly, says that LLPs offer companies “a very large measure of protection against liability while still being taxed as if they were self-employed”. He points out that companies taking up this status range from major accountancy firm Ernst & Young to a two-man band that washes cars by hand.
The basic criterion needed to set up an LLP is that the company must demonstrate it is operating with a “view to profit”. This must be clearly stated in documentation showing the intended direction of the business.
Bull says that it is “essential” to take advice from your accountant before applying to form an LLP. It is also “advisable to form a bespoke members’ agreement” for all those involved.
Application for LLPs must be made to Companies House, which will advise on the necessary actions and will provide official certification.
Baker Tilly has produced a free guide to Limited Liability Partnerships. It can be requested from the website at www.bakertilly.co.uk.
Companies House also provides guidance notes on forming an LLP and the management and administration involved. This is available from the website at www.companieshouse.gov.uk. The application form LLP2 is also available to download from the Companies House site. The registration fee is £95.
(15/10/02)