Demonstrate A Knowledge Of The Legislation Governing The Partnership, Both Unlimited And Limited 1 / 5

Definition of an Unlimited Partnership

'the relationship that subsists between persons carrying on a business in common with a view to profit'

This means that a partnership is not a separate legal entity and

Each partner has full personal liability for the partnership debts (liabilities)

Limited Partnerships

These are now rare

They have the following features

  • Governed by Limited Partnership Act 1907

  • Partners can limit their liability

  • One partner must take on full liability

  • The partners with limited liability are in effect sleeping partners

    They cannot manage / bind the company nor withdraw their capital

Limited Liability Partnership

These are far more common nowadays

They have the following features:

  • Register with the Registrar of companies

  • Name of the partnership must end in LLP

  • Governed by LLP Act 2000

  • Annual accounts must be files (and audited where appropriate)

  • It is a separate legal entity

  • Partners liability limits are stated in the Partnership document

  • The individual partners pay their own tax

    The partnership does NOT pay corporation tax