company law : business types

Question 1

what are the three basic business forms?

Answer 1

• sole trader
• partnership
• limited company

Question 2

what is a partnership?

Answer 2

two or more people who set up and run a business with a view to make profit. each person is personally liable for yours and other mistakes.

Question 3

what are the benefits of setting up a partnership?

Answer 3

• no set up formalities needed
• shared work & responsibility
• new partners buy their way in (raises capital)

Question 4

what are the negative formalities of setting up a partnership?

Answer 4

• have to draw up own partnership deed (regarding authority, salary, termination) otherwise partnership act 1890 applies
• HMRC needs to be informed of employment status (self employed)

Question 5

what are the different types of liabilities associated with partnerships?

Answer 5

• personal
• unlimited
• joint & several

Question 6

how does liability work in a partnership?

Answer 6

each and every partner is personally liable for theirs and everyone else’s actions. if suing, can choose to take all partners to court or can choose who is responsible and liable.

Question 7

what are the duties of partners towards each other?

Answer 7

• full disclosure
• honesty
• good faith
• avoidance of conflict of interest

Question 8

which two acts uphold liability in a partnership?

Answer 8

limited partnerships act 1907
limited liability partnerships act 2000

Question 9

what is an LLP?

Answer 9

limited liability partnership. liability belongs to the LLP therefore members liability limited to loss of investment.

Question 10

which act controls limited companies?

Answer 10

companies act 2006