If you are a partnership you may be considering transferring your business into a Limited Liability Partnership (LLP).
LLPs provide the tax transparency of a general partnership, but with the advantage of limited liability for their members. However, there is a cost associated with transferring a business to LLP in terms of professional fees and management time.
There are also a number of potential disadvantages associated with conversion to LLP, for example:
- Some financial information that is private for a general partnership must be made publicly available by an LLP.
- There is a requirement to apply UK Generally Accepted Accounting Practice (GAAP), which can cause issues where adoption of UK GAAP creates large adjustments to net assets and to profit figures, which previously formed the basis for partner profit distributions.
- Tax effects must be considered, for example, where the existing business has limited companies within its structure, or where the LLP may be treated as an investment or property investment LLP.
RSM Tenon understands the financial, commercial and practical implications of this and has teams of advisers who can work with you to conduct a full cost benefit analysis and determine the suitability of LLP status and, where applicable, implement the transfer.
Key areas to project manage include:
- Business transfer and LLP agreements
- Indemnity and insurance
- Notification of clients and renewal of engagement terms
- Communication with staff and transfer of employment contracts
- Management of tax aspects
- VAT registration
- Notification of bankers, landlord and regulators