What's the difference between an LLP and a company limited by guarantee?

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Hi, I’ve got a query concerning companies. I need to choose between an LLP and limited by guarantee company, I guess. Could anyone give me a brief list of the differences between the two? Need to be armed with all of the information I can get my hands on before I bother registering.

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LLPs:

  • A limited liability partnership is an incorporated business structure that is normally used by professional service firms like solicitors and accountants.
  • You can set up an LLP with two or more individuals for profit-making purposes only.
  • LLP partners enjoy the flexibility and tax transparency of a general partnership structure but they also enjoy the limited liability benefit afforded to limited companies. This means they are not fully liable for the partnership's debts - they are only liable for what they invest and agree to contribute.
  • LLP members are self-employed for tax purposes. They pay Income Tax (and VAT, if applicable) on their share of business profits. The LLP is not taxed.

Companies limited by guarantee:

  • A limited by guarantee company is better suited to non-profit ventures and charities but it can also be used for profit-making purposes.
  • You can register a company limited by guarantee with one person or lots of people.
  • Like LLP members, the members of a limited company enjoy limited liability for business debts. They are only liable for what they guarantee to the company.
  • Limited companies pay Corporation Tax on their profits.
  • Company directors pay Income Tax and National Insurance on any salary they receive from the company.
  • If the members receive any income from the company, they will have to pay Income Tax and National Insurance through Self-Assessment.
a year ago
 

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