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: 02 December 2008 by Tarquin Maynard-Portly
Gary will you please just stop?

Thank you.
Posted on: 03 December 2008 by Polarbear
quote:
Originally posted 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?


Mike,

as an employee you have all the employment right you would expect, i.e holiday pay, sick pay, redundancy etc. As a member of a LLP you have no rights with your "main Company" you just get paid for what you do.

Therefore you have a valid concearn.

Regards

PB
Posted on: 03 December 2008 by Tarquin Maynard-Portly
Thanks Nigel.

I'm due to have another meeting with the MD; lots of questions such as ownership of clients and the income stream from them; they are talking about eventually involving me in equity participation ( in an LLP?! )and drag-along rights should they sell.
Posted on: 03 December 2008 by Polarbear
My pleasure Mike, it seems you have most of the important questions covered.

My main concearns would be client ownership and renewal commissions. My other concearn would be exit strategy for yourself, what happens if you want to sell? Can you sell your goodwill?

I asume that the only two members of the LLP will be yourself and your main body? Your main body will do this to protect their core business. If group pensions is not profitable they will simply close the LLP and you will be out of work, as simple as that, no redundancy, no responsibility towards yourself.

I suspecty the LLP will be overdraft funded as they will be paying expenses and your salary upfront before any commission is received. This is not unusual for professional bodies.

I also asume the Main body will be responsible for compliance and obviously the LLP will need to be registered and fully insured etc.

Its not all negative as group pensions can be very rewarding as I am sure you will know and being taxed under schedule D as self employed is more flexible especially when it comes to cars etc.

I have never been a fan of Limited Companies especially for small business's and in my mind the LLP is more favorable.

Let me know if you need any more advice,

Regards

PB