Sole Traders & Partners Flashcards
What is implied into a partnership agreement for the partnership act 1890
P&L Management Change in business Remuneration Variation in agreement Interest on capital New Partner Expulsion Dissolution Capital Deficiency
Shared equally/ losses same as profits
All entitled to manager / majortiy vote on decsions
Unanimous
No entitlement
Unanimous
5% on additional capital invested
Unanimous
Majority in good faith / good reason
Any partner can insist on selling assets (realisation) payment of firms debt and spliting any surplus
The remaining partners share the capital deficnecy in the proportion to the orginal capital distributed
What are the two important fiduciary duties of the partners
Prohibits partners from keeping profits derived from the partnership without consent
Conflict of interest without full disclousure.
Pay back
What happens if a partner has no authority to cary out a day to day decision for the partnership
The partnership are still bound by the decision as the patnership act states a partners usual acts for the business are binding unless the 3rd party knows they have no authority or does not believe them to be a partner
Under what circumstances can a partnership be dissolved
Death or bankruptcy of partner Expiry of a fixed term partnership Compleyion or termination of a single joint venture Notice given by partner Order of the court
What is the main differences for raising finance between a partnership and a company
A company can raise finance under a floating charge where as a partnership cannot
Can a partner assign their interest om the partnership to another person
Yes however the assignee does not become a partner as a result
Explain the following points in the context of the LLP
Tax Seperate entity Liability Registration Formal partnership agreement Name of partnership Designated members Confirmation statememt
Taxed as individuals Legal seperate entity Limited all partners Submit incorporation document signed by 2 designated members Does not have to but normall does LLP at end 2 designated memeber Submit each year
Explain the following points in the context of regulation and adminitstration of an LLP
Max number of members Ceases to be a memeber Changes notified to registrar Management Accounts Remuneration
no max gives reasonable notice 14 days everyone entitiled Submit accounts like a compnay No entitilement to remunerstion
When a LLP become unsolvent what happenes to withdrawls
Withdrawls made in the last two years can be clawed back if it can be shown that the partners has reasonable ground to believe the partnership was going to become insolvent
