Limited Company v Partnership in 2012

J

Jackie D

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Hi all

Could you please advise as to what is recommended to go with today in terms of a Limited company or Partnership?

Am I right in saying the following?

Limited company:
Currently there is a 3 year corporate tax exemption (12%) in place for new limited companies.

Lets say the company makes profits of 100k pa and each director wishes to take out their 50% share.

They each pay income tax at x% on 50k

After year 4 when corporate tax exemption expires; if they take out the 100k profit then no corporate tax is due?

Partnership:
Profit of 100k pa.

Each partner pays the same amount of income tax at x% on 50k as they would have if taking from a Limited company?



My question is, if banks are insisting on personal guarantees, many suppliers insisting on pro forma, what are the benefits of a limited company today versus trading as a partnership?


Also please, if one of the partners is a director of a limited company since 2010, are they disqualified from becoming director of another limited company if they close their previous limited company down or allow it to be struck off?


Thank you
J
 
First question about tax is totally misunderstood. The corporation tax exemption is restricted to certain business sectors / types and by the amount of Employers PRSI. Partners are taxed the same as sole traders. Company directors have the option of setting salary levels and/or paying corporation tax.
The benefits of limited companies are limited liability, certain tax treatments and often much better regimes for travel & expenses and pensions.
Additionally companies have a tried and tested structure which lends itself to business partners entering and exiting, some partnerships can be a nightmare if problems arise.
Companies come with additional compliance costs and the choice to incorporate should be based on specifics.
 
THat 3 yr CT exemption is causing confusion as people think that it is a blanket exemption across the board whreras it has conditions attaching to it as per previous post Thought this is worth mentioning in part reply to this as I have just read Newsletter from A local FG TD stating it is a 3 yr. exemption -no strings attached This is obviously incorrect & dangerously misleading
 
I assumed it was if YOU are entering a sector you were not involved in before.

Regarding limiting your liabilities; as I mentioned with loans these days requiring a personal guarantee and pensions in the state they are in; I cant see the benefits of starting out as a limited company. We plan to draw a contract up outlining each others responsibilities/profit share etc and will have PI insurances in place.

Surely the same expenses are tax deductible for a partnership in the same way for a limited company?

I'd like to hear reasons what and why people went both Limited or Partnership in recent years?

Many thanks
J
 
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