General Flashcards
When a person engages in business for profit and does not create a partnership or incorporate as a company then he or she operates as what?
A sole principal
When the assets of the individual are the assets of the business, what does the architect operate as?
A sole principal
Does practicing as a sole principal mean that you are working alone?
No. It means that you are solely responsible for the business
What is a ‘Partnership’ defined as?
The relationship which subsists between two or more persons carrying on business in common with a view to profit.
Partners are jointly and severally liable for the acts of the partnership. To what extent is a partner’s personal wealth on the line for the acts of the partnership?
Fully on the line
Do associates share in the profits of the company?
No
Describe a Limited Partnership
Here, at least one partner must be responsible for all the liabilities of the partnership
What is a Limited Liability Partnership?
A partnership in which some or all partners have limited liabilities.
Name one benefit of a Limited Liability Partnership.
Each partner is not responsible or liable for another partner’s misconduct or negligence.
Describe a Private Limited Liability Company.
This is where the liability of the members (shareholders) is limited to the nominal value of the shareholding. If the company is faced with a debt which is greater than the company’s assets, the company can be wound up and the shareholders have no further liability.
What is the principal difference between a limited company and a partnership?
When the shareholders (members) form a company, they are creating a separate legal entity, meaning the companies assets are separate from the individuals assets.
What 3 things must be decided when getting professional indemnity insurance?
- The limit of indemnity
- The people to be covered
- The risks covered.
What is Professional Indemnity Insurance?
A form of liability insurance which helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.
The ARB guidance requires a minimum limit of indemnity of what for each and every claim?
£250,000 for each and every claim.
Failure to take out and maintain appropriate professional indemnity insurance will result in what for the architect?
Them being struck off the register by the ARB.
Why is it to important to have ‘run-off’ insurance cover as an architect?
Because if they cease to practice they will still need to be protected against things that may have occurred prior to the termination of the cover.
ARB recommends that an architect or business has cover for a period of how many years following the date on which they cease practicing?
6
What types of businesses are required to produce accounts and to file them annually with the Registrar of Companies in order that they are available for inspection by an interested party?
- Limited Liability Practices
2. Limited Companies
Name two types of ‘report’ you would expect to see on a companies record on companies House
- Profit and Loss Account
2. Balance sheet
In financial terms, an asset is what?
An economic resource