Structuring your business

Types of business vehicle

Law firms traditionally operated as general partnerships under the Partnership Act 1890 and solicitors were restricted in the types of entities they could work in—broadly restricted to acting as sole practitioners, partners or employees of general partnerships or as in-house lawyers. However, a series of reforms have increased the structuring options available to law firms and their owners, allowing the use of limited liability corporate vehicles, such as limited liability partnerships and companies.

As with any business, it is important to choose the most appropriate form of vehicle to carry on a legal services business; the choice of vehicle may have a bearing on the firm’s success or failure.

Not every vehicle will suit the needs and demands of the firm and its owners. Each vehicle has its advantages and disadvantages. The decision as to which vehicle, or combination of vehicles, to use will be complex and is dependent on various legal, tax and commercial considerations; there may not be a perfect fit.

In addition, the vehicle originally chosen to carry on your business may not continue to be the right choice as the

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