A Limited Liability Partnership (LLP)  is a form of legal business entity where the members have limited liability in a similar way to shareholders in a limited company.

The main difference between a LLP and a limited company is that a LLP has the traditional flexibility of a partnership and is also taxed as a partnership. In many other respects it is very similar to a private company.

Who can start a LLP?

Two or more legal persons can form a LLP. A ‘person’ can be an individual, company, or firm. They can be resident in the UK or overseas.

What are the responsibilities of the Members?

The LLP must have at least two designated members at all times.  Designated members are the same as all other members except they have some further legal responsibilities for which they are accountable. These are:-

1. appointing an auditor (if one is needed);
2. signing and delivery of the accounts to Companies House;  
3. notifying Companies House of changes in membership, registered office, or the LLP’s name;
4. submission of Annual Returns; and
5. acting on behalf of the LLP if it is wound up and dissolved.

What can a LLP do?

A LLP can do all those things that traditionally a partnership has been able to do. However they are not suitable to be used for non-profit making activities.

How do we file the incorporation documents? 

LLP’s can be incorporated electronically either via a company formation agent such as ourselves or through specialist software. Typically prices range from £50 to £200 for similar service levels and return times are usually within 3 hours from the time of submission to Companies House.  Not all formation agents currently provide online incorporation and many rely on postal applications.

Postal applications can be made for the standard registration fee of £40 to Companies House and take 4 to 7 days to be processed. Alternatively some formation agents, lawyers and accountants will still prepare postal applications and fees are usually in the order of £150 to £200.

What should the incorporation documents include?

• The requisite paper or online form;
• The proposed name;
• the registered office address and its situation (i.e. England and Wales, Wales, Scotland or Northern Ireland);

• whether all members are to be designated members or limited to specified and named members only;
• details of each proposed member, and whether they are a designated member or not;
• name approval if a sensitive word is to b used in the LLP name;
• a statement of compliance;
• the appropriate fee.

What is the Registered Office?

A registered office is a real location where notices, letters and reminders can be delivered to the LLP by hand or post. The place of business can be elsewhere.  

A LLP cannot be redomiciled. So an LLP formed in Scotland, cannot at a later date move its Registered Office to England and Wales. However, its place of business can be moved and need not be in the same jurisdiction or country as the Registered Office.

What happens on Incorporation?

On incorporation Companies House will issue a Certificate of Incorporation which will note the name and registration number of the LLP; the date it was formed; and the situation of its Registered Office. It will be stamped by the Registrar.

The LLP’s statutory records as at that point will be published at Companies House and will be available for inspection at the Companies House web site.

What next?

Unlike a Company a LLP does not register its constitution in the form of a Memorandum or Articles of Association with Companies House.  The Members should therefore ensure that a Partnership Agreement is drawn up to fully reflect the objects and constitutional arrangements of the LLP. This is a private document and is not open to public inspection.

Companies Direct provide online incorporation of LLP’s for as little as £50.00; normally processed in under 3 hours by Companies House. Visit our web site for further advice. We also provide legal support services in the drafting of partnership agreements and other constitutional documentation. Telephone 01738 500400

CICs are specifically identified with social enterprise.  Some organisations may feel that a CIC is a more suitable option than charitable status, primarily because of its flexibility and ‘light touch’ regulation.

A CIC can be Limited by shares or by guarantee. Its constitution must include an ‘Asset Lock’. This ensures the distribution of assets and profits can only be done in a prescribed way. They can either be retained within the CIC for community benefit or transferred to another similarly ‘Asset Locked’ entity such as another CIC or charity.

You won’t see many online incorporation agents offering CIC’s because unfortunately they have to be submitted for incorporation by post.  This is because the CIC Regulator has to ensure that the objects of the company meet the ‘Community Interest Test’ and that the constitution contains the required ‘Asset Lock’.  The formation process requires the submission of a Community Interest Statement for approval. The Regulator will also perform an on-going monitoring and enforcement role.

Formation documents are submitted to Companies House in the normal way, who in turn liaise with the CIC Regulator. The registration fee for a CIC is £35.00.

A company that is not currently a CIC can elect to convert to one. A CIC that is a private company can subsequently convert to a public one. A CIC can covert to become a charity or a community benefit society. A charity cannot be a CIC but it can convert to one or register a subsidiary CIC company.

Once a company has been registered as a CIC, it must continue to satisfy the community interest test for as long as it remains one. A company will need to consider:

                        the purposes for which it is set up;

                        the range of activities in which it will engage; and

                        who will be seen as benefiting from its activities.

The test is a test of the motivation or underlying purpose of a company’s activities. To satisfy the test a company must show that a reasonable person might consider that the ultimate objects of the company are the provision of benefits for the whole or part of the community.  So everything that a CIC does should in some sense contribute towards achieving a purpose that is beneficial to the community.

For investors, the regulator sets a dividend cap. Recent changes see the returns payable to equity shareholders in CICs go from five percentage points over the base rate to 20 per cent a year, with no link to interest rates as there was previously.

Companies Direct are experienced in the incorporation and structuring of all styles of company, including those involved in social enterprise. To prepare and submit all the documents necessary to establish a CIC our normal fee is £250.00 + VAT.

Companies Direct can help you start a CIC. For further advice contact us via our website or by telephone on 01738 500400.

So if you make a mistake, but don’t want your formation agent to manage the corrections for you, what must you do? Here’s a check list.

Change of Company Name

A change of name (including a correction to a typographical error) requires the following:

Unless the Articles allow otherwise you must pass a Special Resolution in a general meeting consenting to the change of name or alternatively do so by a Written Resolution.

A printed copy of the Resolution must be sent to the Registrar of Companies within 15 days of it being passed together with Form NM01 and the appropriate filing fee. This can be done online or by post. Fees are £8.00 if filed electronically and £10.00 by paper. Same day charges are £30.00 and £50.00 respectively. 

A Special Resolution requires the votes of 75% of members present in person or by proxy, who are entitled to vote and do vote at the meeting. The meeting at which the resolution is proposed must have had at least 14 days notice, unless a shorter period was agreed by a majority in number of members holding at least 90% of the shares (95% in the case of public companies).

Alternatively, the Written Resolution procedure can be used, and the Resolution will be passed if approved by shareholders representing not less than 75% of the total voting rights of the shareholders entitled to vote on the written resolution on the day it is circulated. No advance notice is required of a Written Resolution.

Change of Director / Secretary Details

A change in details (to include corrections) can be completed by filing the following forms, either electronically or by post. There is no charge levied by Companies House for these changes:

Change of Director Details – Form CH01

Change of Corporate Director Details – Form CH02

Change of Secretary Details – Form CH03

Change of Corporate Secretary Details – Form CH04

Change of Registered Office Details

A change in details (to include corrections) can be completed by filing form AD01 either electronically or by post.

Where the change is a physical location change and other than to correct a typographical error, the change should be resolved at a general meeting of the Directors and a copy of the resolution placed in the minute book of the company’s statutory file.

Change of Shareholder Details – Private Companies

Shareholder details are recorded in the Register of Shareholders which form part of the Company Register.  The Company Register is kept at the Registered Office address or SAIL address.  Shareholder corrections and alterations are made to the Register as appropriate.

For Private companies, Companies House are notified of a change to Shareholder Details (including subscriber Shareholder Details) with the submission of the Annual Return; either electronically or by post.

If it is required that Companies House is notified of a change of shareholder details in advance of the normal Annual Return date then an early Annual Return will need to be filed.

Companies Direct provide a complete company secretarial service, to help with day to day filing and corporate governance issues. 01738 500400

The agreement will also set out how disputes between shareholders are to be resolved; how a sale or part sale of the shares shall take place; what is to happen on the death, bankruptcy or incapacity of shareholders ;  and how the company is to be run.

While the Articles of Association of a Company may set out broad rules of governance and assume unlimited objects, a shareholders agreement can set out these out in much greater detail. While the Articles are required by statute and are therefore on the public record, a shareholders agreement is voluntary and remains private and undisclosed to outside parties.

In broad terms the agreement will set out the following:

• The Parties and objects of the Company;
• How the Company is to be financed;
• Financial information to be provided to Shareholders;
• The issue, transfer, valuation and sale of shares;
• Board make up and remuneration;
• Procedure for Shareholder meetings;
• How the company is to be managed;
• Matters to be reserved for Shareholders only;
• Sale of the Company ;
• Obligations of future Shareholders;
• Actions on the death, incapacity, bankruptcy, etc. of Shareholders;
• Dividend Policy;
• Winding Up;
• Non-competition and non-solicitation;
• Confidentiality.

In drafting a shareholder agreement due account needs to be taken of the competing interests of shareholders. One size does not fit all, and while some terms and conditions will be of benefit to one group they may not be to another. It is for that reason that we recommend prospective and active shareholders seek advice when drawing up their agreements.

Companies Direct provides a range of support services to companies and their owners. We can assist in the preparation of shareholder agreements and other legal documents for companies. For an initial consultation please call 01738 500400.

P60′s

(Summary of an employees pay and tax for the tax year)

Latest date to provide P60 to employees; they are entitled to this by law.

31/05/2011

P11D’s

(Informs HMRC of taxable benefits in kind, such as company cars, given to staff)

P11D to be returned to HMRC

06/07/2011

Class 1A NIC Payments

(Paid by employer on benefits in kind received by staff)

Class 1A NIC Payment for previous tax year to reach HMRC

19/07/2011

Personal Tax Payment

Second Personal Tax Payment on Account to be made.  HMRC will tell you to pay by installments in certain circumstances.

31/07/2011

Personal Tax Returns

Personal Tax Return (to 5th April) to be submitted to the HMRC if you want them to work out your tax liability for you.  Otherwise its 31/01/2012.

30/09/2011

P35s Due

(Employer Annual Return)

P35s due to be filed with HMRC

19/05/2011

Personal Tax Payment

First payment on account to be made.

31/01/2012

www.companiesdirect.co.uk are company administrators and providers of back office support. Call us on  01738 500 400 or email us at info@companiesdirect.co.uk

Many of the SMEs that I talk to have been hacked off at the lack of opportunity to tender for work for Local Authorities, NHS Trusts and others in the Public Sector. 

But following pressure from local Chambers of Commerce, Trade Associations and a general recognition that the “Big Boys” are not the only ones that can provide a good service, on time and on budget, Government north and south of the border has created “tendering portals” that give small businesses a better chance to compete. Anne Farr, a Business Contracts Tendering Consultant with Rothera Group Ltd   says; “At long last central Government has got its act together by creating a contracts hub for SMEs, and Scotland is well ahead of the game.  It costs nothing to be notified of tender opportunities up here, but across the border it costs.  (Why?)  All SMEs can attempt cross-border raids but geography usually limits what they want to tender for.  But this is clearly a step in the right direction.”

For those of you north of Hadrian’s Wall, get registered for free at Public Contracts Scotland  or for those of you in the south go to The National SME Engagement Programme, which goes live on 21^st March. 

Companies Direct help you start, run and succeed in business. For more information or assistance Freefone 0800 612 7788 or visit us at www.CompaniesDirect.co.uk

Mr Steed, who, according to the judge at his trial, “worked like a dog in pursuit of his economic interests”, pled guilty at Cardiff Crown Court to cheating HMRC of £3,558, by failing to declare taxable income of £32,500, and ended up having a Confiscation Order (CO) slapped on him for £707,200!

A tad disproportionate, you might think; visions of sledgehammers and nuts come to mind.

Maybe.  But the coffers are empty and the boys in Downing Street have told HMRC to get them filled.  And I suspect the Revenue may have had their beady eye focused on Mr. S for a while, because they took the unusual step of prosecuting him not only under the Taxes Management Act 1970 (TMA) (failure to declare), but also used the Proceeds of Crime Act 2002 (POCA) to impose a punishment that is normally reserved for those “baddies” who benefit from a criminal lifestyle, such as drug dealers, money launderers, benefits cheats, tax dodgers and the like.

POCA imposes a series of hurdles that have to be overcome before a Confiscation Order (CO) can be issued.

Firstly, the Crown must prove that the Accused benefited from a crime. In this case Mr. S pled guilty to a cheat of £3,558.  He therefore admitted that he was £3,558 better off as a result of the cheat.

Secondly, the benefit to the Accused must exceed £5000 in value. (This is to stop the Crown pursuing minor cases at public expense). Game over for the Crown, you may think.  Not so. The Crown used s.59 of the TMA to argue that because Mr S pled guilty to a cheat of £3,558, he was also guilty of failing to declare an equivalent tax liability for the following tax year.  £3,558 + £3,558 = a lot more than £5,000.

And finally, the Crown has to show that the Accused has a “criminal lifestyle“.  Mr S argued that because he failed to notify HMRC on one particular day, that this didn’t constitute a “lifestyle”.  The Crown responded by saying that Mr. S’s failure was a continuing cheat that extended over 2 tax periods, and therefore amounted to a criminal lifestyle.  And the Appeal Court agreed……

Because the Crown had overcome these 3 hurdles, a CO was issued that allowed the Crown to confiscate all property belonging to Mr. S that he was unable to show was obtained by legitimate means, and because Mr. S’s accounts were less than “pristine”, the judge was entitled to assume that all his belongings were obtained as a result of Gareth Steed’s criminal activity.

Read the Judgement and be afraid. Be very afraid.

Companies Direct can help you manage your accounts and keep you to the straight and narrow.  Contact us on 01738 500 400 or visit www.CompaniesDirect.co.uk

So what should you be prepared to provide and what should you ask for?

KYC – The bank will want to collect due diligence information (sometimes called ‘know your customer’ or ‘KYC’) from all those people who own or have control over the company. So that’s shareholders, directors, and any bank signatories, if different. If the ultimate beneficial owners are sheltered behind a trust deed or nominee arrangement then the bank would look for that to be disclosed too. Normally the bank will look to collect true copies of some photographic ID, and a true copy of proof of permanent residential address. Where parties are located overseas the bank will give directions on how these should be provided.

Source of funds – depending on the anticipated turnover the bank may ask you to disclose the source of funds used to capitalise and run the company. So they will expect to know how you came about the funds being used.

Business Plan – The bank will look to see some form of business plan to give an indication of trading over the first year, the objects of the company, the key personnel, cash flow, break even point, and any borrowing requirement.  The detail to which you go in preparing a business plan will depend on the services you require from the bank. Where you require funding you should expect to disclose significantly more detail than if you don’t.

Account and currency requirements – Depending on where you will be trading you may need several currency accounts and other accounts to segregate clients’ funds, or funds to be utilised for different purposes; for example your tax bill. Some banks will provide you with one account number for all your currency accounts, simply opening a sub-account for each currency. Others will provide you with a range of account numbers.

Add-on’s – Don’t expect to leave the bank without going through the upselling process. They will want to sell you a range of additional products to help you with your business. You don’t have to say yes, and you can shop around.

Online and telephone banking – now essential and the norm. Make sure you get the right level of functionality from the provider. Most banks now offer differing levels of access and add on services dependant on whether you are ranked as a business, corporate, or commercial client.

A good relationship with your bank – surprisingly if you are a business bank account holder you may be relegated to ‘no relationship manger’ status. The bank will expect you to communicate with them via call centres and help desks. This can prove to be extremely frustrating and time consuming. Before you leave the bank with your new account numbers make sure you have a one to one business contact you can speak to and push for information in the future. While the computer may say ‘no’, ask your contact to help you provide the right information so that the computer says ‘yes’.

Companies Direct can help you open a business bank account. For further advice contact us via our website or by telephone on 01738 500400.

So that means:

• clearly identifying that they are real people through some form of photo ID;
• identifying their permanent residential address;
• having a grasp of the likely business to be conducted;
• understanding the source of any funds to be utilised.

The Regulations go on to explain how to report suspect relationships and transactions.

In these tough financial times it’s also a good idea for those businesses that, while they may not be legally obliged to conduct such stringent tests, should do so to ensure the client they intend to trade with is bone fide, has no adverse trading history behind them, and will be able to pay bills.  The instances of clients failing to pay even modest invoices are on the rise.  Don’t let your customers hide behind a corporate identity to avoid payment.

So here are 10 useful tips:

1. Establish a regimented ‘take on’ procedure that is followed in all instances;
2. Obtain photographic ID and proof of address for each controlling party of the client;
3. Conduct a credit search on each individual and or client company;
4. Verify addresses and history through web searches, telephone directories, and electoral rolls;
5. Obtain references from other suppliers and creditors and follow them up by phone;
6. Have solid terms and conditions (T&C’s) of sale or of engagement;
7. For business clients make sure your T&C’s contain personal guarantees provided by the beneficial owners that can be enforced against them in the event of non-payment;
8. Ask for payment up front in the form of Pro-forma invoices or payments on account;
9. Monitor your business relationships at all times;
10. Ensure that you fully document, confirm, and appropriately file client instructions.

Follow these rules and while you may still end up with a rogue client you will have gone a considerable way to ensuring risks are minimised. 

Companies Direct Limited are corporate and trustee services providers registered with HMRC in accordance with the Money Laundering Regulations. They can help your business by providing you with guidance with respect to the Money Laundering Regulations, help you in drafting your T & C’s, and help with vetting and monitoring your clients’.

To find out more contact Companies Direct. 01738 500400.

Here are a few tips:

• Avoid names that are too similar to existing company names;
• Avoid names which include words, expressions, or symbols that are prohibited;
• Avoid names with words that signify a level of excellence, membership, skill, social standing, ideal, or profession, unless you can suitably demonstrate your entitlement to use them.

It’s also a good idea to make sure that your company name will stand the test of time. A name that is very long and too descriptive will prove a challenge when it comes to putting web sites, letter heads and other documents together. It will also be hard for your customers to refer to you without using an abbreviation.

If you want to say how wonderful your new business is, you can do that in your brochures and flyers or on your web site; don’t try and cram it into your company name. So names such as “The Worldwide Widget Enterprise and Global Consultants Group Europe 2011 Limited” should be avoided.

Have a look at how your competitors have named their businesses. If they are successful then it maybe that the style of name they have chosen is proving attractive to customers. So, don’t reinvent the wheel.

Lastly, check your spelling! It’s not unusual for a red faced client to come back wanting a spelling error corrected in a company name. It’s not that quick and requires some extra paperwork to be filed.

A quick way to check the availability of a company name is available on our home page.

Companies Direct help start , run, and manage businesses across the UK. 01738 500400.