Partnerships

Question 1

Partnership overview

Answer 1

Not a separate legal person
Can be formal or informal 
Called a firm not a company
May end with "and Co"
No need for an audit 
Max 20 members

Question 2

Partnership act

Liabilities

Answer 2

Every partner is liable to the full extent of their personal wealth for debts incurred while he is a partner and for any wrongful acts
New partners are not liable for any previous acts
Retiring partners are liable unless agreed by partners and creditors to discharge him from obligations

Question 3

Partnership acts

Profit sharing and management

Answer 3

Shared equally
No interest on capital
Interest on loans at 5%
All partners participate in mgmt and decided by majority
Change in nature, appointment of new partners requires 100%

Question 4

Partnership acts

Dissolution

Answer 4

Any partner can apply to dissolve 
Dissolution steps:
1 Pay debts to third parties 
2 Pay off loans to partners 
3 Re-pay partners' capital 
4 Any excess to be divided between partners equally or according to partnership agreement

Question 5

Limited Liability Partnership

3 provisions

Answer 5

LLP is a separate legal person
No maximum number of partners
Must be registered with the Registrar of Companies

Question 6

LLP accounts and key aspects

Answer 6

9 month deadline
No directors’ report
Disclose profit share of highest paid member if exceeds £200K
Name must appear outside of place of business
Membership agreement (governing how the firm is managed) not sent to Registrar
Wound up
Not dissolved on change of membership