The essay is an argument on the comparison of limited liability partnership and limited company. To start off the discussion author will discuss what limited liability partnership is to give the reader a general idea about the whole discussion. Limited liability partnerships are the sort of partnerships in which members/partnerships have imperfect liability or responsibility. This means that one partner is usually not responsible for the misconduct or any other issues of the other partners in the business. This is something that makes it different from a limited partnership.
(Cavitch, 2010) Normally in usual partnerships, members are responsible for each other conduct and can be held liable for the delinquency of the other partner. LLP shares many characteristics of a normal partnership; however, having limited liability is something that differs from a standard partnership. That’ s what makes it very much similar to a corporation because, in case of any liability, the whole LLP is responsible rather than a single partner. (Easterbrook and Fischel, 1985) The liability is limited in terms of money/assets that one partner has put into the business. To set up a limited liability partnership, all partners are supposed to be listed as self-employed.
Although the partnership has limited liability, the UK law requires at least two members in the partnerships who are designated members and can be held responsible for more liability in case the business runs into trouble. (ALBERTA, 1999)Limited companiesIn this section, the essay will cover aspects of limited companies. The purpose is to give an idea before leading the discussion into the flexibility that a limited liability partnership can offer in comparison with a limited company.
A limited company is a type of privately held company which is listed as a corporation and has shareholders who share liability limited by the number of shares they hold. Although it is a privately held company, personal finances are not part of a company’ s finances are separate from the company’ s finances. (Easterbrook and Fischel, 1985) The shareholders in limited companies can be individuals as well as other companies. The shareholders are the investors in the company however this does not make them liable for any misconduct or debt that a company has.
However, they can either have profit or loss over the investment they made in the company’ s shares
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