LLP have both members and employee on profit share

How best to introduce profit share paid monthly & yearly to employees and members as an LLP?

Didn't find your answer?

Hello and thank you for your time

Unable to find clear answers anywhere online, as to best practices with profit shares between employees and members of an LLP, I've turned here, hoping to hear a clear understanding of what is legally possible to offer everyone the best deal within our cafe.

We are a budding new cafe in a community within the heart of london opening in July 2024. Currently exploring best practices and inclusitivity within our business structure. 

The questions I'm exploring are as follows...

Can we offer both our employees and members a profit share, that is paid out monthly? 
Or can we offer a monthly pay out of a certain % of the profit, and pay the rest out end of the year? 
Or are we stuck with only paying out the profits end of the tax year to employees and members? 
What other options can we consider as an LLP? 

Thank you
Best wishes
Sven Selle 

 

 

Replies (3)

Please login or register to join the discussion.

avatar
By David Ex
06th May 2024 16:00

aSventrick wrote:

Unable to find clear answers anywhere online

Strangely, answers to complicated commercial, HR and tax planning questions aren't available for free online. Appoint (and pay for) and accountant.

Thanks (1)
avatar
By Paul Crowley
06th May 2024 16:12

Why choose an LLP?

Surely performance related pay is more relevant than profit related?
How exactly do you intend to measure profit on a monthly basis?
Will employees get the benefit if power costs are reduced?

Thanks (0)
John Toon
By John Toon
07th May 2024 11:20

As far as profit shares are concerned you can do whatever you want, assuming there are profits to pay out from.

For the LLP members you'll need to ensure the LLP agreement reflects the proposed profit share structure - that's a legal issue so you need a lawyer to draft this, but before you complete this make sure an accountant, who understands LLP's, reviews it beforehand as poor drafting can have a significant impact on the accounting.

For employee profit shares you've got a few options - make it contractual, make it discretional etc. You need a HR advisor/lawyer to help with guidance on this, again with an accountant who can advise on the accounting/payroll impact.

Thanks (0)