Wondering if anyone can help me on this matter. I have a friend who is about to go into partnership with someone and they asked me if they should set up as a Ltd company?
My thoughts were they should start out as a Ltd co, with them both being equal Directors. They are both putting the same amount into the business. To start with it will be both of them doing it on a part-time basis while they are both in full-time employment, then once its up and running and hopefully successful they can them do it full time. So is it best to start as Ltd or both as partnership Soletraders? Hopefully I will be doing the bookkeeping and keeping them in order!
It's really up to them. If they go into a partnership, to protect themselves should anything go wrong, they really need to involve a solicitor to draw up a partnership agreement. With a Ltd company they could both be equal shareholders by putting in the same amount and it may be easier for them to see the Company as separate legal entity rather than the partnership being two self-employed people sharing a business, if that makes sense.
And don't forget limited liability partnership (LLP) as an option. (we did that one in a couple of threads. Try this one for starters : http://www.book-keepers.org.uk/t34364108/llp-vs-ltd-company/).
Not suggesting that you take that route but it's important that you cover all the options available to them.
Personal opinion is that a normal limited company with shareholding based on level of investment is the neater option but for something like this they really need to look at all of the benefits and pitfalls of each model.
Whilst as Sheila states, the final decision is down to the business owners it might be a good idea for you to get them to talk to an accountant for this decision (or at least advise them in writing to talk to an accountant) even if you handle everything else for them.
HTH,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks for the replys, I thought it should be a LTD just to be on the safe side of things.
Its a Property Letting Agency/Property Developement company they are starting, so initially with the letting side of it theres not much outlay other than website, home office, software and alot of advertising. The property Development will come later.
I know plenty of Accountants for them to contact so no worries there, I will probably be seeking advise on their behalf anyway, as I have a feeling I will be quite involved in getting them started!
