Kiran Chotai, Private Client Senior Manager, has been published in Accountancy Today and Accountancy Age, discussing the transitions firms are making within the accounting sector from limited companies (LTDs) to Limited Liability Partnerships (LLPs).
Kiran notes that this shift reflects a strategic adaptation to the UK’s evolving business landscape, where flexibility and direct tax benefits are increasingly prioritised. Above all, a firm needs to weigh up the benefits of each structure before deciding which resonates with their business model the best.
LLPs offer significant advantages, particularly in taxation and operational agility. Unlike LTD companies where profits are taxed both corporately and on dividends, LLPs enjoy a tax-transparent status, meaning profits are only subjected to income tax as they are earned, not when distributed. LLPs also inherently promote a more integrated business operation, with members engaging directly with clients and sharing in the firm’s administration and profits. This contrasts with LTD structures, where directors manage operations and shareholders are often removed from daily business engagements.
The process of transitioning however requires careful planning, including drafting an LLP agreement and transferring contracts under compliance with employment laws. In short, Kiran comments: “There are pros and cons for accountancy firms looking to become an LLP, but given the nature of our industry, the benefits of becoming an LLP can far outweigh the challenges.”
You can read Kiran’s article in full via Accountancy Today here and via Accountancy Age here.
Strategic tax advice for LLPs
For firms considering this move, the decision between an LLP and an LTD structure should align with long-term business goals and operational philosophies. The inherent flexibility and direct engagement offered by an LLP can be crucial for firms looking to enhance client relationships and agile management practices in a dynamic professional landscape.
For further advice on transitioning to an LLP, please contact Kiran directly.
