Setting up a business partnership is a challenging time, with many different considerations to take into account as you get your venture underway.
Perhaps one of the most important aspects is establishing what type of business vehicle you are entering. General and limited partnerships are two possible choices, with each having various benefits, depending on your own personal circumstances. As well as information on who can be a partner, Ralli Partnership Law can provide guidance on the specific traits of both general and limited partnerships, helping you to determine which, if either, is suitable for your business.
A general partnership involves all partners being jointly liable for any legal actions or debts which may be incurred by the partnership. This means that if the partnership has an outstanding debt, partners’ personal assets are not protected and can be used to pay the creditor in question. In basic terms, each general partner is defined as being an agent of the partnership, meaning that all partners can be deemed liable for actions a fellow partner takes if it is deemed they are working in the interests of the partnership. The liability of a partner is greater when entering in to a general partnership, which may be an important consideration for some businesses.
If a partner dies, is no longer well enough to work or simply withdraws from the partnership, the partnership must be terminated. However, a partnership agreement can usually cover for these scenarios, with the remaining partners able to take over the shares of their departing colleague.
While limited partnerships share some of the same qualities as a general partnership, the differences which do exist are significant.
In a limited partnership, at least one partner is required to be a general partner. Only the general partner is considered as being an agent of the partnership. The other type of partner in a limited partnership is a limited partner. They are essentially a ‘silent partner’, whose liability is limited to the amount they have invested in the business.
They can still lose money they have invested, but will not be held liable for any wider debts owed to creditors by the partnership.
General and limited partners advice from Ralli Partnership Law
To get in touch with Ralli Partnership law for legal advice on any aspect of a partnership, contact us on 0161 832 6131. Alternatively, you can use the contact section of the website to receive a callback at a time more relevant to you, or a response by email.