Partnerships Flashcards
What legislation are partnerships governed by ?
The partnership act 1890
What decisions must be unanimous in a partnership ?
- Changing the nature of the business
- Introducing a new partner
- changing terms of partnership agreement
What is the order of payment when a partnership is sold ?
Creditors - partners who lent money - partners who paid their share of partnership capital - surplus shared between partners
What are partners responsibilities under PA 1890 ?
- Not compete with the firm
- Account to firm for any private profits made without other partners consent
- Bear share of any loss made by business
When is a firm liable to third parties even if didn’t consent to contract ?
Apparent authority - for actions not authorised but:
A) Transaction related to business of kind by firm
B) Partners would usually be expected to have authority
C) Other party didn’t know they didn’t have authority
D) Other party deals with person they believe to be a partner
What must a partner do to escape future liabilities when leaving partnership
Give actual notice to anyone firm has had previous dealings with and place a notice in London gazette to notify future dealings of the partners leave.
What debts are the partners liable for ?
Any debts incurred whilst a partner
How are the partners liable in a partnership ?
Jointly and severally liable - one can be sued for all and recover
How does a partner leave an LLP?
By giving reasonable notice and notify companies house with TM01
What is deductible expenditure ?
Expenditure of an income nature and wholly and exclusively for the purpose of trade
+ (plant and machinery)
What is the business annual investment allowance ?
First £1M of fresh qualifying expenditure on plant and machinery in accounting period is wholly deductible
How is trading profits calculated ?
(Chargeable receipts - deductible expenses) - capital allowances = trading profits
What are chargeable receipts?
Money received from sale of goods and services.
What are the three categories of income under income tax ?
Non savings non dividend (NSND)
Savings income
Dividend income
How is income tax payable calculated ?
Total income - allowable reliefs = net income
Net income - personal allowances = taxable income
