Business Structures

Question 1

Difference between LLP and partnership re assets sales?

Answer 1

1. Assets owned by partnership rather than the partners jointly
2. For LLP, interests and responsibilities can be transferred with the asset but the default position is that assignee cannot interfere with LLP business or management

Question 2

Which business structure(s) have the least onerous compliance and disclosure requirements?

Answer 2

SP and partnership - no ongoing disclosure or commercial requirements

Question 3

Which business structure(s) are easiest to incorporate?

Answer 3

SP and partnership - but for partnership recommended to use a deed.
LLP and LLC - must register at CH and get Cert of Incorporation

Question 4

Difference between LLP and partnership re liability of owners?

Answer 4

LLP - members only liable up to their capital contribution (subject to terms of the partnership agreement)

Partnership - partners jointly and severally liable for all debts

Question 5

4 differences between LLP and LLC for tax?

Answer 5

1. Trading profits - LLC pays corporations tax (can be reduced by paying directors to reduce gross profits); LLP partners pay income tax in accordance with their profit share entitlement
2. Capital gains - LLC pays corporation tax on the sale of a capital asset + CGT on the consequent increase in shares; LLP only pays CGT on profits from the sale and enjoys tax free personal allowance
3. Inheritance tax - LLC gets 100% business property relief; LLP only gets 50%
4. Pensions - LLC gets greater tax relief from pension scheme contributions; LLP gets less (lower threshold deductible from taxable income)