These businesses are the most common and simplest ones since they just have one owner who runs the business by himself and is self employed. These types of businesses are east to start since they do not require much, if not any, legal obligations, and paperwork.
It is important to note that the sole trader assumes the “all” the responsibility of the business. This includes looking after all the operations, issues, debts, loans and others. The problem with this business is that the sole trader has unlimited liability for the business and in case of bankruptcy, the sole trader would have to pay off the debts and claims from his pocket or by selling off the company’s assets and the sole trader’s assets as well (Hicks & Goo, pp. 13-18). Important here to note that the law does not provide the sole trader’s company, the status of a “separate legal entity” which other forms of business enjoy having. These businesses do not have the option of equity financing or in simple words issuing bonds and stocks for raising capital. Moreover, if the sole trader goes for debt financing, even then, the loan would be on his name and not on the company’s name and he, not the company, would be liable for paying off the loan (Mancuso, pp. 65-69).
The second type of business would be of partnerships where two or more partners jointly start their business and share the responsibilities and ownership of the business. Unlike sole proprietor where only one person is responsible for everything, in partnerships, all the partners share the responsibility of running the business. However, their liability remains unlimited. This is because of the fact that partners are liable for any decision whether taken by him or any other partner. Moreover, if one partner runs away than the rest would have to pay his or her debts liabilities from their pockets (Martin, pp. 41-49). These types of businesses are easy to form and easy to dissolve as ...
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“Limited Liabilty Partnership Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.net/miscellaneous/391310-limited-liabilty-partnership.
This is because it requires a delicate balance of ideas and arrangement such that both partners agree to co-operate with each other and advance their mutual interest (Wood 21). A common ground is often established within which the two parties work together while at the same time achieving their own goals.
It must be noted, however, that limited liability companies may not necessarily work for profiteering (Jitman, 2009). This is a hybrid form of business that has characteristics of both sole proprietorship and partnership. Some of the reasons why the business has become so popular are: - 1) Limited Liability: - The clause of limited liability ensures that the owners/shareholders are responsible for no more than the amount they invested in the business.
Name Course Course Instructor Date Limited Liability Partnership As a young entrepreneur, I intend to start a technology business, which deals with creating a social network intended for the people. The aim of my business will be to give the public a social networking establishment that will allow people to communicate all over the world.
The Limited Liability Partnerships Act 2000 is an Act of Parliament which introduced the concept of the limited liability partnership into English and Scottish law (wikipedia.com).
In the Limited Liability Partnership Act 2000 the following provision is included in this act; A Limited Liability Partnership has unlimited capacity.
Now the question arises that what does responsible by law means for the partner's deeds. It means that when a business is being conducted by a group of persons in the form of partnership then they have to pay for all the liabilities, debts and loans which were taken by their partner and that they cannot be relieved of their this responsibility on the defense ground that they are not responsible for the actions of others conducting business along with them.
LLC is an ideal choice for those business owners who would like to take advantage of tax benefits offered thereof, while also able to install an organizational structure resembling a private or public corporation.
One of the key advantages of limited liability
It is quite important to understand the concept of Agency as Partnerships are understood to be essentially relationships of agency. Agency is defined as an individual who is known as Agent, intentionally agreeing and accepting to act for or on behalf of someone else.
All partners are required to indicate their agreement, either in writing (Dignam, & Lowry, 2009).
Laws governing partnership formation tend to be harmonized in consideration of foreign investments. Both
They are more of investors that partners in the business. They are also not involved in the management of the business.
The general partner on the other has an active role to play in the running and management of the business. These partners have a
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