Business Entities - An Overview

Different types of organization require different services for tax planning and accountancy. These may include payroll management, succession planning, employee incentivisation and more.

We have summarized the major types of business entity and how we cater to them below. Please call us on 0117 960 3236 to see how we can help you.

Limited Companies

You have to register with the Registrar of Companies at Companies House. The shareholders' personal assets are protected if the business fails (there is 'Limited liability'). You can only lose what you have put into the business. The business is controlled by the board of directors, each held personally responsible for its management and who must act in the company's best interests. Capital is raised by the sale of shares. Dividends are paid to the shareholders. Those working for the company have employee status and directors are employed by the company through the PAYE tax system. The company is a legal entity and can be sold. Annual accounts must be filed to Companies House. For turnovers over £5 million you are obliged to have the accounts audited.

We specialise in accounting services for Limited companies including audits and tax planning. We also supply a variety of related services:

• Project appraisal
• Preparation of budgets and cash flow forecasts
• Buying and selling a business
• Employment law, staff contracts and commercial contracts
• Evaluation of sources of finance
• Buying or selling commercial property and leases
• Assessing ways to reduce overheads

Sole Trader

To set up, a sole trader must register as self-employed. If the business fails, then the owner is fully responsible for all the business's debts. The owner makes all management decisions and finance is usually from the owner's personal assets. All profits belong to the owner who is self-employed for the purposes of taxation. Even if the owner doesn't draw on profits they are still taxed. Losses can however be offset against tax on other income. (Certain types of businesses may need a licence to trade.)

We provide a full accounting and tax planning service to sole traders.

Partnership

To set up, partners need to register as self-employed. It is important to get advice and draft a 'deed of partnership' to deal with future disputes or changes to the partnership. If the business fails, then the owners are fully responsible for all the debts. The partners share responsibility for controlling the business and it is usually financed by the partners' personal assets. All profits are shared between the partners, who are self-employed for the purposes of taxation. Even if the partners don't draw on profits they are still taxed; but losses can be offset against tax on other income. The partnership is dissolved if one of the partners dies, resigns, or is bankrupt. (Certain types of businesses may need a licence to trade.)

We provide a full accounting and tax planning service to partnerships.

LLPs (Limited Liability Partnership)

An LLP is an alternative corporate business vehicle (introduced in 2001) that gives the benefits of limited liability but adds the flexibility of organising a company's internal structure as a traditional partnership.

Any new or existing firm of two or more persons can incorporate as an LLP - but it is not possible to convert a company to an LLP or vice versa. LLP's are not available to charities. LLP's are similar to companies in that they must provide financial information including the filing of annual accounts.

Charities

You must register with the Charities Commission (the regulatory body for charities) and appoint a treasurer, a fundraising committee and a board of trustees. A charity must not be run on a for-profit basis. As a registered charity, you are obliged to be transparent and accountable to your donors whether government bodies, companies or individuals. We have extensive experience with charities and can provide the necessary skills to deal with all your accounting needs.

Rates and Fees

We have a simple time-based fee structure ideally suited to most small companies and sole traders. Rates for specialised services and larger companies are available on application.

The cost of preparing accounts will be lower if they are provided to us in electronic form in a spreadsheet or with an accounting package, such as Sage Line 50. If you want to learn more about how you can simplify your accounting and reduce your accountant bills by moving to Sage, please call us on 0117 960 3236 or use the contact form.

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