Partnership

When two or more person joins hands to start a business, sharing the costs, profits and losses between them, it is called Partnership. Partnership is a common type of ownership in small businesses along with sole proprietorship. Partnership, as a form of ownership offers some tax benefits, however it is not as preferred as Company because of the liability factor. Irrespective of their investment or ownership of the business, all partners are liable in personal capacity. However, Limited Liability Company can take care of this shortfall as well. However, a Partnership should have a Partnership agreement (a legal document) drawn up to show the rights & responsibilities of all the partners. There may also be 'sleeping partners' who own a share of the business but are not engaged in the day-to-day running of the business. A Partnership also has unlimited liability. Partnerships are common in the business such as accountancy and law.

N.B. Since April 2001 there has been a new form of Partnership called a Limited liability Partnership (LLP). This is like a cross between a Partnership & a Limited Company as it has Limited liability (like a Limited Company), but has to be owned by at least two members - being a Partnership!

There are three types of Partnerships are present.
General Partnership
Limited Partnership
Limited Liability Company

Private Limited Company

The liability is Limited in a Private Limited Company. Unlike a sole trader where the liability is unlimited, with a Limited Company the liability is Limited to the value of the shares issued. This means that any debts are debts of the Company & not of the owners. To form a Limited Company it must be registered at Companies House and the Firm must have different legal documents including a Memorandum and Articles of Association. There need only be one director & they have to prepare annual accounts and put forward them to Companies House. Private Limited Companies can range significantly in size. They may consist of a small groups of people based business or they could be the Virgin group (which is a Private Limited Company majority owned by Mr Meldon).

Privite Limited Company Advantages

Privite Limited Company Disadvantages

Incorporated Firms

The next thing is a term of legal structure is to form an Incorporated Firm. That is a Firm that is a registered Firm at Companies House (who are the government registrar of Companies). There are two main types of Incorporated Firms one is Private Limited Company & second is Public Limited Company.

Unincorporated Firms

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Public Limited Company

Like a Private Limited Company, a Public Limited Company has shares, but the main difference is that these shares can be bought by anyone freely on a stock exchange. Ownership is therefore open to anyone who wants to buy shares. Public Limited Companies has legal requirements in that they have to produce annual reports & accounts and file them with Companies House. There are different other needs including:

You must have at least two directors.
You have a fully qualified Company Secretary.

Public Limited Company Advantages
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