2. Forms of practice Flashcards
What are the differences between private and public liability company?
Public liability companies have shares traded on the stock exchange and private companies do not. There are also differences and how they are run. public arable to raise funds more easily yet they’re answerable to their shareholders. Private companies are owned by their founders management or a group of investors which can make the management dynamic very different.
Give some examples of types of practice
There are several types of practice available to landscape architects. These include sole practitioner, partnerships, companies and they can be structured in the private or public sector or as a not for profit organisation such as a charity or cooperative.
Give some examples of public sector bodies that a landscape architecture may work in
A local authority, National Park authority such as a Forestry Commission or Natural England or the Environment Agency.
What is a sole practitioner?
This is a form of practice normally involving one individual but they can employ others. This person both owns and runs the business. It’s a very simple business structure and is easy to set up and receives all of the profit. The business is not a separate legal entity to the individual and therefore they are responsible for it and liable to all debts and personal assets are at risk.
What is a partnership?
A partnership is a form of practice whereby there is more than one partner who shares workload knowledge, profits liabilities and the risk to their personal assets. They are formed under the partnership act and the structure and responsibilities will be set out in a partnership agreement.
What are the pros of a partnership?
That easy to set up partners share responsibility, workload and liability and there is a partnership ethos
What are the cons of a partnership?
Like a sole practitioner a partnership is not a separate legal entity so personal assets are at risk. There is also possible conflict between partners, agreements bind all of the partners and if anyone wanted to leave the partnership would have to be dissolved as it cannot be sold.
What is a limited liability partnership?
In addition to the collaborative characteristics of a partnership LLP‘s allow collective limited liability the LLP becomes a separate legal entity so personal assets are protected. LLP are formed under the LLP act and they have defined conflict resolution. They are slightly less simple to set up and need to be registered with companies house and they have to share finances on here.
What is a structure of a public sector practice?
Landscape architects working in the public sector may work in agencies such as natural England, which comes under DEFRA or for local planning authorities or national parks.
What is a limited liability company?
Limited liability companies are similar to a partnership in that the liability is limited and it has to be registered at companies house. The pros of this are that they pay less tax (corporation tax). It’s easier to remove unsatisfactory directors than in partnerships. It’s easier to raise funds due to the option of having shareholders. The cons are that there is more paperwork and formalities and financial information is shared on companies house. Public limited liability companies list their shares on the stock market and are more driven by their shareholders or profit.
What is the structure of a local authority?
Local authorities led by a council elected leader and cabinet. They consist of several departments such as planning and these departments are them made up of individual officers such as planners, tree offices, and landscape architects.
What is the difference between a sole trader and a limited liability company?
LI membership type, appropriate insurance, whether they are registered at companies house, and whether the company is a separate legal entity protecting the sole traders personal finances.
Tell us about your company
Define is a private limited liability company that’s owned by two founding directors with approximately 30 employees. We are a relatively small practice providing landscape architecture, urban design, town planning and more recently architecture services mostly in the private sector.
In a partnership, how do partners share liability?
Each partner is bound to share the responsibility of the practice including the actions of fellow partners. This liability is not limited to the assets of the company and personal assets are also at risk.
In a limited liability partnership, how do partners share liability?
Because a limited liability partnership is a separate legal entity to its partners the partners are only liable up to the limit of the partnerships assets. Their personal assets are not at risk.
In a company, how do various persons share liability?
Shareholders are not personally liable for the torts and obligations incurred by the company or other shareholders in a public company, this is slightly different. They may be liable for an unpaid amount on their shares.
Directors are not liable for company debts or thoughts only their own torts, they can be sued personally but likely it will be covered by professional indemnity insurance. This is the same for employees.
What’s the difference in liability between a landscape architecture in a public versus private practice?
Private may have legal responsibility for other employees such as partners and they may be liable for debts of the practice.
Public landscape architect can only be responsible for their own act relating to their own profession.
What would you need to consider when setting up a practice?
You’d need to consider whether you want personal assets protected from liability claims, how much effort is involved in setting up, how much admin is involved in running, whether you would like to share the responsibility and knowledge with anyone such as a partner in a partnership or another director.
How does a limited liability company differ from a limited liability partnership?
- Their formation: they are both registered with companies house but companies are incorporated under the companies act and a partnership is incorporated under the partnership act
- if someone leaves a partnership cannot continue, whereas a company can continue whoever leaves or joins
- tax: partnerships carry out self-assessment per member where is companies are treated as a separate entity to their members and so are subject to corporation tax.
- The liability is similar members of a partnership and directors of a company are liable for their own torts but liability is limited to the extent of the assets of the partner or company. Personal assets are protected.
- Seeking to set up my own practice, I would be sure to consult solicitors and financial advisors to ensure I was making the best decision.
What would you consider when setting up a practice?
I would consider whether I wanted shared responsibility and liability, admin cost, degree of risk, flexibility required in terms of management and whether I would like to sell shares in the stock exchange or sell the business in the future and how much tax I want to pay.
What are the pros and cons of a company versus a partnership?
A partnership is more simple to set up and manage and has less paperwork and admin involved in running the company both have the advantage of protecting personal assets if limited liability.
What is the difference between public and private limited liability company?
They’re very similar, but the main differences that shares for a public company traded on the stock exchange and there are minor differences in the liabilities of shareholders. It’s also easier to raise funds in a private company.
