Embedded Files
A Partnership is an agreement between self-employed individuals to carry out a business that is not registered with companies house but has to be registered with HMRC. Charitable and other social organisations should not use this business structure.
Partners in a partnership share profit according to their relevant profit-sharing ratios. Disputes can accus between partners and in order to avoid them in the first place, it is best practice to draw up the partnership deed after each partner has sought legal advice.
LIMITED LIABILITY PARTNERSHIP (LLP)
In partnership, there is no limited liability like a Limited company, however, a Limited Liability Partnership (LLP) gives the benefits of Limited Liability for partners and they can protect their personal assets if things go wrong. LLP is registered with the companies house in the same way as a Ltd company.
DIFFERENCE BETWEEN PARTNERSHIPS & LIMITED LIABILITY PARTNERSHIPS
Partnership
Partnership
Obligation - Your obligations are same as for Sole Trader
Liabilities - You are totally liable for any debts or legal compensation your business becomes liable for.
Pros - Often more money can be raised to start the business if more than one person is involved.
Cons - All personal assets of each partner are at risk if the business fails. Personal bankruptcy can occur.
Ltd liability partnership (LLP)
Ltd liability partnership (LLP)
Management - The business is controlled by its designated members
Liabilities - The LLP will be a separate legal entity and while the LLP itself will be liable for the full extent of its assets the liability of the members will be limited.
Finance - The capital is provided by its members, LLP’s are similar to Partnership or Sole Trader in this respect.
Profits - Income derived by the members will be closer to that of a ‘Partnership’ than to the dividends paid by the Companies.
Page updated
Google Sites
Report abuse