Partnership, LLP or corporate practice
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.
Incorporation increasingly popular
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.
Corporate practice helpsheet
The Are you ready to go into practice? helpsheet 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:
- identifies areas that practitioners need to consider when deciding whether to practise within a corporate structure
- highlights some of the regulatory and other requirements of corporate practice
- provides a useful checklist covering a wide range of issues for consideration.
Changes in the composition of a firm helpsheet
Guidance on best practice to ensure that clients are not disadvantaged by any changes to the composition or structure of your practice including the admission, retirement, or expulsion of principals, the sale of the practice or a dispute between the principals
Fit and proper declaration helpsheet
Provides a pro forma fit and proper, independence and confidentiality declaration ready for copying and completion by principals and personnel
An outline of suggested issues to be addressed in partner appraisals from ICAEW.
For further enquiries please contact Advisory Services on +44 (0)1908 248 250