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adam Clowes

Legal structure
« on: November 22, 2008, 06:10:10 pm »
Hi,

For 3 people working part time to provide a full time carpet cleaning service, what kind of legal structure would be best? Limited liability partnership, limited company, or partnership?

Thanks

pete sween

  • Posts: 97
Re: Legal structure
« Reply #1 on: November 22, 2008, 08:04:06 pm »
Hi Adam

There are many variables affecting this. Investments etc. I would talk to an accountant if I were you. Only person I know on here that is qualified to answer that is Roger "the diplomat" Peach.

Pete

carlton care

  • Posts: 429
Re: Legal structure
« Reply #2 on: November 22, 2008, 10:23:42 pm »
Adam

Do a search under company formations, but there is no definitive answer to such a question, as Pete says far too many variables.

Doctor Carpet (Ret'd)

  • Posts: 2024
Re: Legal structure
« Reply #3 on: November 23, 2008, 04:19:25 pm »
In terms of running the business there is little to choose.

A partnership would be the cheapest to set up and be the least complicated.But a word of warning, partnerships are the easiest things to get into but can often be the most difficult, and most expensive to get out of. So if you go down this route thrash out a partnership agreement which will cover such matters as distribution of profits and how one or more partner can leave BEFORE  you start the business.

Limited liability partnership (LLP) is not really relevant in this case. It is a form of business more suited for such professions as accountants and solicitors where there is a possibility of being sued for huge amounts of money over and beyond their indemnity insurance. Providing you have all your correct insurances (public liability, treatment risk (and employee liability as required)) then you will have sufficient cover.

Limited liability company's main difference is that a company is a separate legal entity and can sue and be sued in it's own name. It protects you from creditors claiming your own assets if the business went bump but it is more expensive to set up and maintain with ongoing higher costs for accountants and statutory returns to HMRC and Companies House. All companies are governed by their Memorandum and Articles of Association. The Memorandum covers the companies interactions with other people and organisations whilst the Articles of Association are the internal rules of the company and in relation to your original question are effectively the same as a partnership agreement.

There are tax advantages either way for partnerships and companies, The Ltd. company ones are not as much as they were a few years ago but are still beneficial although you really have to have a certain level of net profit to make it worth your while.

As stated earlier seek separate professional advice from your accountant and solicitor before coming to a decision.

How's that for an answer?
Diplomacy: the art of letting other people have your way

Ian Rochester

  • Posts: 2588
Re: Legal structure
« Reply #4 on: November 23, 2008, 08:09:47 pm »
If possible I would avoid setting up a company like this, it can only end one way.  A business with 3 bosses and no employees cannot work, how are you going to share out the workload, the profits, the problems?

PaulKing

  • Posts: 1626
Re: Legal structure
« Reply #5 on: November 24, 2008, 07:10:34 am »
If possible I would avoid setting up a company like this, it can only end one way.  A business with 3 bosses and no employees cannot work, how are you going to share out the workload, the profits, the problems?

i agree
www.revitaclean.com  established 1968 in Newcastle Upon Tyne

Doctor Carpet (Ret'd)

  • Posts: 2024
Re: Legal structure
« Reply #6 on: November 24, 2008, 08:45:25 am »
I'm assuming that Adam who started the thread is the same Adam who was asking another question elsewhere about how long a tank full of solution would last/how much carpet it would clean.

If so, then I presume this is just another part of his college project.
Diplomacy: the art of letting other people have your way

adam Clowes

Re: Legal structure
« Reply #7 on: November 25, 2008, 03:25:14 pm »
Yes, that is right.

This is all good advice. I'm not sure how serious they take the project when marking it so I should be able to make the info I now have work.

I decided to do the proj on carpet cleaning because I thought it would be simpler than something like a shop, bar or restaurant (plus everyone else is already doing these). I was wrong!

Cheers all

garry22

Re: Legal structure
« Reply #8 on: November 25, 2008, 03:56:29 pm »
Adam,

The problem here is not what the professionals tell you. It is what the amateurs who mark it think!

Years ago, as part of my professional qualification I had to do a project for the construction industry. I spent a couple of days with a loft conversion company, who showed me everything I needed to know.

When I submitted it the project was slaughtered by the guy who marked it (who had been lecturing on theory for the last thirty years. He was so out of touch because he had not been in the field for three decades!).

This forum is about people with experience, passing advice to others.

If you are doing a business studies course, then the chances are that the person marking it has never even had a paper round. Don't get too despondent if they mark you down.

The classic example of this is in the Rodney Dangerfield film "Back to School".

He plays a construction magnate who goes back to college to get closer to his son. He has to do a project on how to run a contracr job. He put "real world" factors in (paying bribes to the politicians, the Teamster's Union and the Mafia). He is promptly marked right down because his approach does not fit the theoretical model in the course books.

What you learn here, although proven to work in the real world, might not satisy your tutors.

Best of luck

Garry