Analysis of Different Types of Partnership

Analysis of Different Types of Partnership Disclaimer: This work has been submitted by a student. This is not an example of the work produced by our Law Essay Writing Service . You can view samples of our professional work here . Analysis of Different Types of Partnership Introduction In this assignment I am expected to analyse different types of Partnership. During this I would be explaining and evaluating those types of partnership and be able to advise my clients which one is the best one for someone starting a business for the first time and also be able to states all the benefits of each type of business structure. According to the classic definition of partnership provided by s.1 of the Partnership Act 1890 is: â€Å"Partnership is the relation which subsists between persons carrying on a business in common with a view to profit.† Partnership is an incorporated body which means that the partnership does not have a separate legal personality from the partners. In the eyes of the law the partners is the business. If one partner make a decisions regarding the partnership and it goes wrong all partners are liable, they all can end up personally bankrupt because their personal assets can and will b e used to pay the partnership debts. In another hand if one partners become personally bankrupt the creditors can be entitled to his or her share of the partnership. This is why it is important to have a partnership agreement where the partners can ensure themselves against bankruptcy of individual partners. In the deed they can specify the outcome of any undesirable eventuality. It is the partnership agreement that rule the partnership. In case of no partnership agreement there is the Partnership Act 1890. The Act does not state any formal decision making structure of the partnership. According to the act a partnership does not requires one. The partners can set out the partnership agreement according to their needs. Usually the partnership deed is used to stipulate the dos and don’ts of the partnership and to delegate or retain the power and responsibility of the partners. It has to cover all eventualities, such as who owns the partnership premises; how new partners are to be taken in, and how they are to be paid; retirement of partners; circumstances in which a partner may be removed from the partnership Partners’ relationship must always be of the business’s best interest. It is very different from the relationship between employer and employee. Partners are business owners depend on their shares is the partnership which give them a number of co-existent rights. They have the right to take parts on decisions that affects the business; they have the rights to share profits and losses according to their shares on partnership; the rights to examine the accounts, to veto in the entrance of new partner and all partner are at liberty to the good faith of the other partners unless specified otherwise in the partnership deeds. There are three types of partnership: The general partnership, Limited Partnership and limited liability partnership. In general partnership all partners are liable for all debts of the business at the same proportions t hat they have in profits. The income and expense is reported on a separate return for tax purposes, but each partner then reports his or her pro-rata share of the profit or loss from the business as one line on his personal tax return. The most common form of partnership are group of people of the same family working together like a family plumbing firm and in another hand there are often group of professional people who work individually but have the benefit of shared support services like a firm of solicitors, doctors and accountants.