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50. Very similar to sole traders
except this is where two or more people are
involved in the business itself. This includes
shared responsibility.
51. Partners are treated as
self employed and taxed as such, the profits
being shared in proportion to your agreement,
either verbal or written.
52. The main disadvantage
is that each partner can commit the partnership
contractually.
53. It is strongly recommended
that a solicitor at the beginning of the partnership
formally draw up a partnership agreement; this
would cover the legal obligations of the partners
and what happens in case of disputes.
54. The agreement will also
covers the profit share agreement so there can
be no doubt about what was meant from the outset
of the business.
55. There is unlimited personal
liability, the partners are responsible for
the business debts and their personal assets
can be taken to pay your creditors in the case
of bankruptcy.
56. A limited company can
be the business structure your business requires.
This could be for: -
o Credibility – it can be regarded by
some as more reliable than sole traders or partnerships
for various reasons. There is public information
available on companies, which is not available
for other types of business, which are very
private.
Raising of finance can be easier for companies
than for sole traders etc. Issuing of shares
is one example.
57. The company can
complete all the transactions that a sole trader
can, contracting, own property etc. the big
difference that in most cases if the company
goes into liquidation the directors have no
personal liability.
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