Members have been able to practise through a corporate vehicle since December 1991. A corporate practice can take one of two forms: a Limited Company or, since 6 April 2001, a Limited Liability Partnership (LLP).
It is a matter of personal and practical choice as to whether a corporate practice or an unincorporated practice is the more advantageous to your own particular circumstances.
A corporate practice can provide a similar range of services to those provided by a sole practitioner or partnership, subject to meeting certain regulatory requirements.
There are many factors that will influence your decision, starting with the commercial implications but also including taxation and legal issues, practical matters and regulatory requirements.
A limited company can have one director, but an LLP must have a minimum of two members, although one of those members could be a limited company.
Practising through a corporate structure has become increasingly popular, although the factors determining which kind of structure is most appropriate are different.
The main reasons for incorporating as a limited company appear to be either to achieve tax efficiencies or to separate ownership from management.
The establishment of an LLP is usually more driven by liability issues and the fact that it is a separate legal entity from the individual members. Other reasons for incorporation are succession and retirement from practice.
The Corporate Practice helpsheet - PAS1/HS08 (PDF 120KB/14 pages) reviews the major issues for consideration when contemplating practising within a corporate structure.
It examines the specific requirements of the ICAEW on members practising in a corporate practice and, in particular:
An outline of suggested issues to be addressed in partner appraisals from ICAEW’s Practice Support Services.
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