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Analysis of Business Ownership - Partnerships and Soletraders

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Introduction

Partnership A legal contract entered by two or more people who run a business together and shares a fixed proportion of profits and losses. What?s a partnership? A partnership is a relatively simple and flexible way for two or more people to own and run a business together. There are three types of partnership: 'ordinary' partnerships, limited partnerships and limited liability partnerships. Ordinary Partnerships An 'ordinary' partnership has no legal existence distinct from the partners themselves. If one of the partners resigns, dies or goes bankrupt, the partnership must be dissolved - although the business can still continue. Limited Liability Partnerships (LLPs) LLPs must have at least two designated members - the law places extra responsibilities on them. ...read more.

Middle

Responsibilities If the partnership has debts, the partners are jointly liable for any amounts owed and so are equally responsible for paying off the whole debt. If a partner leaves the partnership, the remaining partners may be liable for the entire debt of the partnership. Therefore, partners do not enjoy any protection if the business fails. Features in common The profits and gains of the partnership are shared among the partners, unless the partnership agreement states otherwise Each partner is personally responsible for paying tax on their share of the profits and gains, and for their National Insurance contributions. The partnership must keep records showing business income and expenses. A partner can be an individual or another business, eg a limited company or another partnership. ...read more.

Conclusion

You want to ensure that you submit this Personal Tax Return, and make the appropriate payment of income tax on time. Keeping organised books. Liability As a sole trader, you are personally responsible for any debts run up by your business. This means your home or other assets may be at risk if your business runs into trouble. Disadvantages & Advantages The main disadvantage is that you, as the owner of the business, are solely liable for any consequences of business failure or any other liability for example injuring a customer or property damage. The advantages of being a sole trader are immense not lease because the owner has full control over the business for daily operations as well as how large they wish to grow it. ...read more.

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