Professional practices across many sectors are increasingly recognising the benefits of operating as a limited company. These can include:
- as the company creates a separate legal entity, the liability of the owner/s is limited to their investment;
- personal assets are protected if the practice fails;
- it's easier to create a corporate brand;
- it may be easier to sell the practice as a limited company;
- profit extraction is easier and more tax efficient; and
- suppliers may feel more comfortable and confident.
Architects, accountants, dentists, solicitors and surveyors are amongst those who are enjoying the advantages of incorporation.
Previously, firms of solicitors had no option but to operate as a partnership. It is now more common to see solicitors operating as either a limited company or a Limited Liability Partnership (LLP). However, many are still not clear as to the benefits or costs. A corporate structure allows fee earners to focus on clients and can make the firm much more agile.
We are seeing more law firms of moderate size considering the benefits of becoming a limited company to make the firm more dynamic and flexible in what is an increasingly competitive market.
The structure of a limited company has many benefits, from enabling it to access external investment more easily and freeing up revenue to invest in growth. Most importantly though, incorporation can provide the chance to completely re-invent the traditional management structure.
A limited company will provide a better shape for growing the firm. In particular, as a limited company, a firm will have a clear capital structure, making it more attractive for external investment, if required, to drive further expansion.
Other professional practices
Whilst these benefits will ring true for professional practices in other sectors, it is important to take account of the relevant regulatory requirements for each. Here are just a few examples:
- Dental practices - the new company's articles should comply with the General Dental Council's requirements and the Dentist Act 1984, and the following specific requirements should be noted: At all times when the company is carrying on the business of dentistry the majority of the directors of the company shall consist of either registered dentists and/or registered dental care professionals.
- The following words and expressions are controlled by the Veterinary Surgeons Act 1983 - Vet, Veterinary, Veterinary Surgeon, Veterinary Practitioner - they cannot be used as part of a company name without written non-objection from the Royal College of Veterinary Surgeons.
- The Architects Act 1997 imposes restrictions on company names including the term Architect, requiring written non-objection from the Architects Registration Board.
What is involved?
Jordans will ensure the articles of your company meet the requirements of the relevant governing body. The incorporation process itself is quick and straightforward with companies typically completed with 24 hours. We'll take care of all the formalities for you and provide all you need: from the electronic and printed certificate of incorporation and industry-specific articles through to directors' first meeting minutes, company registers and share certificates.
- An agreement to transfer the existing business to the new company.
- A shareholders' agreement to regulate the relationship among the shareholders in the company.
- Transfer of the practice premises, depending on whether these are owned or leased.
Need more information? Contact our experts on 0117 918 1391.