Joining a business set up as an LLP...
Posted by: Tarquin Maynard-Portly on 01 December 2008
Well good evening.
I wonder if I might pick the brains here.
I am seriously considering joining an IFA practice to develop their group pensions book. The firm is pretty well established, and to be honest I'm quite excited about the opportunity.
One factor does strike me as a little oddd, in that the idea is to set up an LLP and write business through this, but with funding for eg. salary via what sounds like an overdraft. I'd be joining on a schedule D basis which I assume will actually be self-employment. I do not doubt that the buines is there to be written but I am slightly concerned about the lack of faith this shows from the main body; I've not yet seen an offer or discussed terms but I was wondering if anyone here might have any thoughts?
I know that there are some accountants here as well as sound businessmen. ( This query was raised elsewhere but that person cannot look in that place any more. )
Thanks in anticipation
T M-P
Posted on: 01 December 2008 by gary1 (US)
Yeah, go hire an accountant and a lawyer and PAY for some expert advise.
Posted on: 01 December 2008 by Jeremy Marchant
quote:
Originally posted by Tarquin Maynard-Portly:
I am slightly concerned about the lack of faith this shows from the main body...
Successful businesses and partnerships are so because the people in them work together well; they have good business relationships with each other, with their clients and suppliers, and indeed everyone else.
It seems like what you're proposing is starting off on the wrong foot. If your future colleagues doubt you before you even start, you might find this is a recurring problem.
Posted on: 01 December 2008 by Tarquin Maynard-Portly
quote:
Originally posted by gary1 (US):
Yeah, go hire an accountant and a lawyer and PAY for some expert advise.
Was that an attempt at some kind of joke?
Posted on: 01 December 2008 by Tarquin Maynard-Portly
Jeremy
Maybe I'm just being a bit paranoid; then again, there is a credit crunch and some prudence on the part of the other guy could be expected, I suppose.
Posted on: 01 December 2008 by Chillkram
quote:
mike lacey
Senior Member
quote:
Tarquin Maynard-Portly
New Member
?!!!
Posted on: 01 December 2008 by gary1 (US)
quote:
Originally posted by Tarquin Maynard-Portly:
quote:
Originally posted by gary1 (US):
Yeah, go hire an accountant and a lawyer and PAY for some expert advise.
Was that an attempt at some kind of joke?
Absolutely not, you asked for some advice and I gave you an excellent suggestion. What your potential partners are setting up sounds a bit fishy to say the least. Certainly setting you up as "self-employed" schedule D when you clearly would by an employee is just a vehicle for them to try to avoid paying taxes,insurance benefits, retirement benefits,work comp insurance premiums etc... Not a situation I'd be looking to get myself into as a career move if I were in your shoes. Does not bode well for the future IMO.
Posted on: 01 December 2008 by jon h
quote:
Originally posted by Tarquin Maynard-Portly:
I do not doubt that the buines is there to be written but I am slightly concerned about the lack of faith this shows from the main body; I've not yet seen an offer or discussed terms but I was wondering if anyone here might have any thoughts?
IFAs and dodgy business practises? Whatever next? You'll be telling me that my pension at Equitable Life was a damn fine idea and that the FSA are a great bunch of honourable chaps. And I shouldnt have any concern that the head of the FSA is (according to the BBC R4 1 o'clock news today) ALSO head of Gordon's climate change panel too -- his skillset must be utterly staggering to be expert in so many things and to give both hugely important roles his full and undivided attention!
jon
Posted on: 01 December 2008 by Tarquin Maynard-Portly
Sorry Gary, I thought you'd just decided to have a pop at a Noob.
There are people on here whose opinion I'd value and trust - Mick Parry, Polarbear etc. Your comments about "a vehicle for them to try to avoid paying taxes,insurance benefits, retirement benefits,work comp insurance premiums etc" are wide of the mark.
Naturally I'd seek advice when the time comes but for now, I'm asking the community.
Posted on: 01 December 2008 by jon h
quote:
Originally posted by gary1 (US):
Certainly setting you up as "self-employed" schedule D when you clearly would by an employee is just a vehicle for them to try to avoid paying taxes,insurance benefits, retirement benefits,work comp insurance premiums etc...
Nothing that a goodly dollop of IR35 wont sort out.
Posted on: 01 December 2008 by Huwge
Citizens Advice Bureau is a good online source for employment rights. Typically, as a self-employed person you have limited rights / protections when compared to an employee, e.g statutory sick pay, participation in company pension scheme, expense reimbursement, etc.
In this instance, expert advice is your only real protection even if both parties are well intentioned.
Posted on: 01 December 2008 by gary1 (US)
Maybe so, but on this side of the pond this is a strategy used exactly to avoid what I have described.
Posted on: 01 December 2008 by Tarquin Maynard-Portly
quote:
Originally posted by jon honeyball:
IFAs and dodgy business practises? Whatever next? You'll be telling me that my pension at Equitable Life was a damn fine idea
If you'd asked an IFA ( and you almost certainly did NOT buy your Despicable Life policy from an IFA, did you? ) they would have raised concerns about their financial strength. Most of the IFAs I know did just that.
The Times headline was perfect: "How the smug got mugged". People went to Despicable Life because they thought they did not pay commission. The ads saying this soon changed to "we don't pay commission to middle men" - the ( tied ) agents of Equitable Life where amongst the highest paid in the industry.
quote:
and that the FSA are a great bunch of honourable chaps.
They mean well, but the markets are too complex. The FSA was not around when Equitable where in business, btw.
On the "honourable" side; how many people do you know that have lied to get compensation for "missold" endowments?
Posted on: 01 December 2008 by Tarquin Maynard-Portly
quote:
Originally posted by gary1 (US):
Maybe so, but on this side of the pond this is a strategy used exactly to avoid what I have described.
As your knowledge is based on the other side of the pond I appreciate your interest but do feel you have little of real value to add.
Posted on: 01 December 2008 by 555
Adam - please change my forum name to Manfred Studley-Lushington.
Posted on: 01 December 2008 by KenM
quote:
Originally posted by gary1 (US):
Maybe so, but on this side of the pond this is a strategy used exactly to avoid what I have described.
It's good advice. It may cost a little, but it could save you from a financial disaster.
Ken
Posted on: 01 December 2008 by jon h
London Bridge has a long standing and fine tradition of being a place where the decapitated heads of the guilty were impaled on pikes.
i look forward to the day the tradition is continued, starting with the heads of the bank of england, the fsa, and the main high street banks.
:-)
Posted on: 01 December 2008 by Sloop John B
quote:
Originally posted by Chillkram:
quote:
mike lacey
Senior Member
quote:
Tarquin Maynard-Portly
New Member
?!!!
SJBPosted on: 01 December 2008 by gary1 (US)
quote:
Originally posted by Tarquin Maynard-Portly:
quote:
Originally posted by gary1 (US):
Maybe so, but on this side of the pond this is a strategy used exactly to avoid what I have described.
As your knowledge is based on the other side of the pond I appreciate your interest but do feel you have little of real value to add.
Tarquin, you asked for advice and were given a solid suggestion. From the comments generated thus far others here seem to agree with me. At this point you are just being rude!!
Posted on: 02 December 2008 by Gary S.
Tarquin/Mike
Seems a sensible suggestion to me.
Our practice which was previously a partnership toyed with becoming an LLP before finally going limited.
There are pros and cons on both sides and you need to weigh these up before proceeding.
In our case we were looking to limit our personal liability whilst making things as tax efficient as possible. The limited company won in the end on the grounds that the directors (the former partners) are able to draw a minimum salary thus reducing national insurance contributions and draw the balance as dividend payments. This is however a loophole that we all know won't last forever, and it's very difficult to go back.
The disadvantages of the limited co (or in your case the advantages of a LLP) are the ability to remain far more flexible and acccounts don't have to be submitted to companies house each year. Furthermore, once we became directors, we got hammered for company car tax, so we bought the cars out of the practice and now run them privately, previously the use of a partnership car didn't atract the same level of tax.
To not set up an LLP would leave you personally liable for the partnership's debts or losses etc which is not something I would feel comfortable having spent the last 25 years aquiring the family home etc.
Also, consider life insurance/critical illness policies on your partners, you never know!
Gary
Posted on: 02 December 2008 by gary1 (US)
In the US we also set up corporations,LLPs, LLCs to limit liability as Gary mentions above, no difference there.
Some of the other reasons for setting up this particular LLP as indicated above sound vaguely familiar!!
Posted on: 02 December 2008 by Polarbear
quote:
The disadvantages of the limited co (or in your case the advantages of a LLP) are the ability to remain far more flexible and acccounts don't have to be submitted to companies house each year.
I believe LLP's have the responibility of filing accounts at Company's House within a designated time limit.
There is nothing wrong with an LLP, many professional bodies are setting themselves up as LLP's thesedays. The LLP has all the security of a company, ie Limited Liability whilst retaining the benefits of being taxed as Self Employed under schedule D.
I would obviously suggest you consult an Accountant as you will need specialist advice,
Regards
PB
Posted on: 02 December 2008 by gary1 (US)
quote:
Originally posted by Polarbear:
I would obviously suggest you consult an Accountant as you will need specialist advice,
Regards
PB
Sounds familiar to me and by one of your respected voices as I recall from above. I guess the time has come as you say.
Posted on: 02 December 2008 by Tarquin Maynard-Portly
quote:
Originally posted by gary1 (US):
Tarquin, you asked for advice and were given a solid suggestion. From the comments generated thus far others here seem to agree with me. At this point you are just being rude!!
Gary, you where having a dig; I know it, you know it.
I did not think it necessary to point out that I would take advice on the issue, clearly I should have done.
I raised the subject as I expected that other posters here would have done the same ( correct ) and that eg. Polarbear would be kind enough to comment. ( correct again. )
Posted on: 02 December 2008 by Tarquin Maynard-Portly
GaryS / PB
Thanks guys. One concern I do have is that as part of an LLP it would be far easier for the "main" company to simply stop supporting the LLP, or just cut it loose. I do not think it would be as easy a break if I was to join the main company as a schedule E employee - is this correct?
Posted on: 02 December 2008 by gary1 (US)
Tarquin,
Yes,Polarbear did respond and he told you what I said which is that you need to go out and hire an accountant and/or lawyer because you need expert advice.
The only difference between his response as well as others who've suggested that you need expert advice is that they were more PC with their comments and I was rather blunt and cut to the chase. Sorry!
