Advantages and disadvantages of UK Business partnership:
1. General Business Partnerships:
A General Business Partnership is set up by a group of sole traders. In a general partnership, all the business partners are self-employed. This means that every individual has to register with HMRC and complete their own personal tax return through Self Assessment.
Advantages: Each partner pays tax on their share of the business’s profits. Disadvantages: Each partner is liable for any business losses, meaning if one partner is unable to pay, the other partners will have to cover their share of the debt. It will put the other partners’ assets at risk.
2. Limited Partnership (LPs)
A Limited Partnership consists of at least one limited partner and at least one general partner. The general partner is usually in charge of the limited partners and the business. A limited partner’s liability is limited to their level of investment and they have nothing to do with the daily management of the partnership.
Advantages: A limited partner does not participate in the business, he/she invests capital and receives their portion of the profits.
Disadvantages: As passive investors who do not take part in the management, limited partners cannot sustain losses that are more than their annual income
3. Limited Liability Partnership (LLPs):
A Limited Liability Partnership (LLP) consists of at least one person and at least one person and corporate body.
Advantages: General partners in an LLP have limited liability.
Disadvantages: Some businesses or people may avoid doing business with this type of partnership because the partners have limited liability.
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