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How to choose and manage a solicitor

By Wayne Adams,2014-06-29 09:39
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How to choose and manage a solicitor ...

    Legal structures: the basics

To put your business on a proper footing with authorities, you

    need to make sure that it has the right legal structure. It's

    worth thinking carefully about which structure best suits the

    way that you do business, as this will affect:

    ? the tax and National Insurance that you pay

    ? the records and accounts that you have to keep

    ? your financial liability if the business runs into

    trouble

    ? the ways your business can raise money

    ? the way management decisions are made about the

    business

    There are several structures to choose from, depending on

    your situation. This guide will help you understand the

    differences between them.

    If you are not sure which legal structure would best suit your

    business, it's a good idea to get advice from an accountant or

    solicitor.

     1

    Self-employment To be a sole trader, a partner, or a member of a limited

    liability partnership as an individual rather than a company, you

    must be self-employed - and registered as such with national

    Revenue & Taxes Authority (RTA). This does not mean that you

    can't also do other work as an employee, but the work you do

    for your business must be done on a self-employed basis.

    If you are not sure whether this work counts as self-

    employment, ask yourself these questions:

    ? Do you present your clients with invoices for the

    work that you do for them?

    ? Do you carry out work for a number of clients?

    ? Are you responsible for the losses of your business

    as well as taking the profits?

    ? Can you hire other people on your own terms to do

    the work that you've taken on?

    ? Do you have control over what work has to be done,

    how the work has to be done and the time when and

    place where the work has to be done?

    ? Have you invested your own money in your business or

    partnership?

    ? Do you provide any major items of equipment which

    are a fundamental requirement of the work you carry

    out?

    ? Do you have to correct unsatisfactory work in your

    own time and at your own expense? If you can answer "yes" to most of these questions then you

    are probably self-employed already, and should let RTA know

    this immediately if you have not already done so. Usually, there

    is no fee for registration but there is a fine if you fail to

    register while being self-employed.

     2

    ? Sole trader

    Being a sole trader is the simplest way to run a business, and does not involve paying any registration fees. Keeping records and accounts is straightforward, and you get to keep all the

    profits. But you are personally liable for any debts that your business runs up, which can make this a risky option for

    businesses that need a lot of investment.

    .

    Management and raising finance

    You make all the decisions on how to manage your business.

    You raise money for the business out of your own assets,

    and/or with loans from banks or other lenders.

Records and accounts

    You have to make an annual self assessment tax return to RTA. You must also keep records showing your business income and

    expenses.

Profits

    Any profits go to you.

Tax and National Insurance

    As you are self-employed, your profits are taxed as income.

Liability

    As a sole trader, you are personally responsible for any debts

    run up by your business. This means your home or other

    assets may be at risk if your business runs into trouble.

     3

    ? Partnership

    In a partnership, two or more people share the risks, costs,

    and responsibilities of being in business. Each partner is self-

    employed and takes a share of the profits. Usually, each

    partner shares in the decision-making and is personally

    responsible for any debts that the business runs up.

    Unlike a limited company, a partnership has no legal existence

    distinct from the partners themselves. If one of the partners

    resigns dies or goes bankrupt, the partnership must be

    dissolved but the business may not need to cease.

    A partnership is a relatively simple and flexible way for two or

    more people to own and run a business together. However,

    partners do not enjoy any protection if the business fails.

Set-up

    Each partner needs to register as self-employed.

    It's a good idea to draw up a written agreement between the

    partners. For further advice, consult an accountant or

    solicitor.

Management and raising finance

    Partners themselves usually manage the business, though they

    can delegate responsibilities to employees. Partners raise money for the business out of their own assets,

    and/or with loans. It's possible to have 'sleeping' partners

     4

    who contribute money to the business but are not involved in

    running it.

    Records and accounts

    The partnership itself and each individual partner must make

    annual self-assessment returns to RTA The partnership must keep records showing business income

    and expenses.

Profits

    Each partner takes a share of the profits.

Tax and National Insurance

    As partners are self-employed, they are taxed on their share

    of the profits.

Liability

     In Greece, partners are jointly liable for debts owed by the partnership and so are equally responsible for paying off the whole debt.

     5

    ? Limited liability partnership (LLP)

    A limited liability partnership (LLP) is similar to an ordinary

    partnership - in that a number of individuals or limited

    companies share in the risks, costs, responsibilities and profits of the business.

    The difference is that liability is limited to the amount of

    money they have invested in the business and to any personal

    guarantees they have given to raise finance. This means that

    members have some protection if the business runs into

    trouble.

Set-up

    There is no restriction on the number of members, but at least

    two must be designated members - the law places extra

    responsibilities on them..

    If the LLP reduces in number and there are fewer than two

    designated members then every member is deemed to be a

    designated member.

    LLPs must register at Companies House.

    It's a good idea to draw up a written agreement between the

    members. For further advice, consult an accountant or

    solicitor.

     6

Management and raising finance

    Usually the members manage the business, but can delegate

    responsibilities to employees.

    Members raise money out of their own assets, and/or with

    loans.

Records and accounts

    The LLP itself and each individual member must make annual

    self-assessment returns to RTA

    All LLPs must file accounts with RTA

    An annual return will be sent to the members before the

    anniversary of incorporation each year. It needs to be

    completed and returned to RTA with the appropriate fee. .

Profits

    Each member takes an equal share of the profits, unless the

    members’ agreement specifies otherwise.

Tax and National Insurance

    ? Members of a partnership are taxed on their share of

    profits and pay the tax and National Insurance

    contributions (NICs), according to their business structure. ? An individual will pay income tax and NICs, and a limited

    company member will pay corporation tax.

    ? The profits of a member of an LLP are taxable as profits

    of a trade, profession or vocation and members remain self-

    employed and subject to Class 2 and 4 NICs.

     7

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Management and raising finance

    ? A director or board of directors makes the management

    decisions.

    ? Finance comes from shareholders, borrowing and retained

    profits.

    ? Public limited companies can raise money by selling shares

    on the stock market, but private limited companies cannot.

Records and accounts

    ? Accounts are filed with RTA .

    ? The directors are responsible for notifying Companies

    House of changes in the structure and management of the

    business.

Profits

    ? Profits are usually distributed to shareholders in the

    form of dividends, apart from profits retained in the

    business as working capital.

Tax and National Insurance

    Companies pay corporation tax and must make an annual

    return to RTA

    ? Company directors are employees of the company and

    must pay as well income tax on their salaries.

    ? If your company or organisation has any taxable income

    or profits, you must tell RTA that your company exists and

    that it is liable to tax.

     9

Liability

    Shareholders are not personally responsible for the company's

    debts, but directors may be asked to give personal guarantees

    of loans to the company.

     10

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