'Partnership and Limited Liability Partnership Organization Essay\r'

'Introduction\r\nThis is a report that shows a comparison between both fusion and expressage indebtedness union organization and to advise Mr. erythema sol argon on the personal credit line organization that is more belike to fit his need for habilitateting up a new consulting stage job.\r\nFor this particular project, our group assumed that Mr. topaz used to be an accountant working for a big news report firm and is now feel to set up a sm entirely accounting consultancy byplay.\r\n1Process Required to Setup Business brass instrument\r\n d givestairs be the processes to setting up a union and a limited financial obligation better halfship short letter organization respectively:\r\n1.1Partnership\r\nFirstly, the collaborators rich person to fill with the fipple flute an application for acclaim and reservation of union take a crap. subsequently the application is beingness approved, a union is ask to be registered online via BizFile with ACRA through a pr ofessional line of credit registration firm if both of the better halfs ar non local citizen.\r\nThe league moldiness call for at least two spouses for registration. Following be the cultivation needed:\r\n1) Proposed seduce of the Partnership\r\n2) Particulars of the allys/managers (foreign passport or Singapore ID)\r\n3) Residential address of the partners/managers\r\n4) Consent to be fool as Manager and Statement of Non Disqualification to travel as Manager\r\n5) If partner is a ac keep company: adjustment expound of the company\r\n6) Singaporean or PR must(prenominal) pay Medisave\r\n7) Declaration of compliance\r\nACRA testament then send an telecommunicate of nonification substantiate the registration. A furrow profile containing the registration details screw be obtained as a softcopy via email from ACRA upon successful registration. Softcopies argon unremarkably sufficient to all purposes in Singapore. (enterAsia Information go Pte Ltd, 2010)\r\n1. 2 peculiar(a) liability Partnership\r\nFirstly, the partners take to fill with the Registrar an application for approval and reservation of LLP name. After the application is being approved, an LLP is undeniable to be registered online via BizFile with ACRA through a professional subscriber line registration.\r\nFollowing are the information needed:\r\n1) Proposed name of the hold in obligation Partnership\r\n2) Particulars of the LLP partners/managers (foreign passport or Singapore ID)\r\n3) Residential address of the LLP partners/managers\r\n4) Consent to Act as Manager and Statement of Non Disqualification to Act as Manager\r\n5) If partner is a company: allowance details of the company\r\n6) Declaration of compliance\r\nACRA go a carriage then send an email of nonification positively charged the Singapore LLP registration. A business profile containing the registration details can be obtained as a softcopy via email from ACRA upon successful registration of the LLP. So ftcopies are usually sufficient to all purposes in Singapore. (enterAsia Information Services Pte Ltd, 2010)\r\n2Legal Characteristics of for individually one of the Business Organizations\r\n2.1The Characteristics of Partnership (ASSAR, 2011)\r\nTwo or more persons: Partnership involves business by a group of persons. on that point must be at least two persons to bring league into existence. Although on that point is no uttermost number required in the Partnership Act, the Companies Act has placed a maximum limit 20 people in a business. A company must be registered if there are more than 20 people in the business.\r\nContractual Relation: A compact is a holdual human relationship arising tabu of an commensurateness among the partners, a person does non become a partner out of his status as is the case in joint family. Persons entering in confederacy must be competent to enter into a contract as it is essential, and the agreement among partners may be spoken or in writing. A written agreement or deed is preferred because it helps in firmness some disputes among partners later on.\r\nLawful Business: A confederacy agreement only exists in a lawful business.\r\nSharing of profits: An agreement among partners must include the sharing of profits and losings. A charitable trust cannot be called partnership because there is no sharing of profits. Profit sharing is only a superficial evidence of partnership besides not a conclusive proof. The employees of a business may withal share profits but they are not the partners.\r\nNo Separate Legal initiation: A partnership firm is not a legal entity of its own. This means that the firm and the partners are atomic number 53 and the same. A firm is only a name to the collective name of partners and no firm can exist without partners. The rights and liabilities of the partners are the rights and liabilities of the firm. Management of the firm vests in partners who are its owners in any case.\r\nUnli mited Liability: every(prenominal) exclusive partner is apt collectively and severally for the obligations of the partnership firm. Therefore, if assets of the business are not sufficient to set up the liabilities of creditors then private property of partners can be used to meet them. The creditors can claim their dues from anyone or all the partners. If these liabilities are met by one partner then he is entitled to receive nonexempt contributions from other partners.\r\nRestriction on Transfer of Shares: No partner can transfer his shares to an outsider without the unscathed consent of all other partners. It is based on the principle that a partner being an mover of the firm cannot delegate his\r\nauthority unilaterally to outsiders.\r\n achievement Good Faith: The very basis of partnership business is good faith and mutual trust. separately and every partner should act honestly and slightly in the conduct of business. A firm cannot be run if there is suspicion among pa rtners. Partners must have faith in each other for travel rapidly the business smoothly.\r\n2.2The Characteristics of Limited Liability Partnership (LLP)\r\nA limited financial obligation partnership is a business structures that operates similar to a partnership organizational structure. The fight is the limited personal financial obligation afforded to each fellow member of the company. Each partner is responsible for their own actions era conducting business. LLPs are tailored for professionals, such as doctors, lawyers and accountants. (Howell, 2012)\r\nEvery Partner Equal: Each partner is an refer member in a LLP company. They decide together on various company is fulfills, such as the name of the business, where it is located and how it is going to be operated. Partners also share equally in the profits and losses of the business. The number of people in LLP must not exceed 20.\r\nLimited Liability Protection: Each partner in this type of company is protect against the actions of the other partners which results in a lawsuit. For example, if one partner is subject of a malpractice claim and loses in speak to and have to pay damages, the other partners are not held financially responsible. However, partners in a LLP are credible for the obligations of the company such as loans used to buy equipment and utility expenses.\r\nPass Through Taxation of pay: A limited liability partnership company is taxed similar to a business formed nether the partnership and restore proprietorship organizational structures by a process called pass-through receipts. The company profits are not taxed at the company level but instead are â€Å"passed through” to the partners to be account on their individual tax returns. This prevents the double taxation that occurs in corporations where profits are taxed at the company and shareholder levels.\r\n3Advantages and Disadvantages of Partnership and LLP\r\n3.1Partnership\r\nAdvantages of Partnership\r\n1. C apital: due to the nature of the business, the partners would contribute their share of bully to outset up the business. Hence, the more partners there are, the higher the mensuration they could put into the business. This would give the partners better flexibility and great probable for growth. It also means more potential profit, which would be equally shared between the partners.\r\n2. flexibility: It is generally easier to form, manage and run a Partnership. There are fewer restrictions in a partnership than in companies, in terms of the laws governing the formation. As the partners have the only say in the way the business is run without the interference of shareholders, they are farthest more flexible in terms of management, as long as all the partners can agree.\r\n3. divided up Responsibility: Partners would be able to share the debt instrument of the running of the business. This would allow the partners to make the most of their abilities and potential. kinda of d ividing the management and taking equal shares of each business tasks, they would be able to divide the work fit to their skills. Thus, if one partner is good with figures, they could deal with the leger keeping and accounts, while the other partners exponent have several(predicate) niche areas and specialize in different tasks.\r\n4. Decision Making: Partners share the decision do and can help each other out when needed. With more partners means more brainstorming could be in place and the information they came out with could be picked out for business views and for the solving of problems that the business may encounter. (Adrain, 2010)\r\nDisadvantages of Partnership\r\n1. Disagreements: One of the most common disadvantages of partnership is the possibility of disagreements between the partners. People often have mixed ideas on how the business should be run, the task arrangements and are picky about what the best interests of the business are. All these might lead to argumen ts which might not only endanger the business, but also the relationship of those involved. That is why it is always preferred to draft a deed of partnership during the formation period to curb that all partners are aware of what are in place in case of disputes and prepare for the procedures if a partnership is dissolved.\r\n2. Agreement: As the partnership is jointly run, it is crucial that all the partners agree with decisions that are being made. This means that in some situations there is little freedom with regards to the management of the business. This is especially so compared to sole traders, where the sole trader need not explore agreement from anyone but himself.\r\n3. Liability: Ordinary Partnerships are subject to unlimited liability, which means that each of the partners shares the liability and financial risks of the business equally. This might put of the idea of partnership for some people, as they might not want to take the risk.\r\n4. Profit sharing: As partne rs share the profits equally, it can lead to repulsion where one or more partners are not contributing a fair share of drive into the running or management of the business, but good-tempered reaping equal rewards.\r\n3.2Limited Liability Partnership\r\nAdvantages of Limited Liability Partnership (Janus Corporate Solutions, 2008) 1. Separate Legal personal identity: A limited liability partnership has a separate legal identity. They can own properties, at the same time they can enter into contracts, and sue or be sued in its’ own name.\r\n2. Limited personal liability: The partners of the limited liability partnership will not be held personally liable for any business debts incurred by the limited liability partnership or the wrongful acts of their partners. A partner may, however, be held personally liable for claims from losses resulting from his own misconducts or omission.\r\n3. Perpetual succession: Any changes in the limited liability partnership (e.g. resignation or death of its partners) do not affect its existence, rights or liabilities.\r\n4. Ease of compliance: Compliance requirements are more complex than sole proprietorship but simpler than a private limited company.\r\nDisadvantages of Limited Liability Partnership (Janus Corporate Solutions, 2008) 1. Formation of limited liability partnership requires a minimum number of 2 partners at all times.\r\n2. Individual partners can commit the partnership to formal business agreements without the consent of their partners.\r\n3. Limited liability partnership lacks the ease of ownership transfer and enthronement that a company structure provides.\r\n4. There are no corporate tax benefits: Tax exemptions are available to private limited companies but are not available to limited liability partnerships. A limited liability partnership is treated as tax transparent which means that limited liability partnerships are not taxed as an entity. Instead each partner is taxed on their share of the profi ts as per the personal income tax rates.\r\n4Analysis on Choosing the Business Organization\r\nSince Mr. Tan is setting up a business for accountancy consulting, he should opt for a Limited Liability Partnership organization instead of a Partnership.\r\nMr. Tan is currently new to the business world, and might not have found a partner he could fully trust yet; and so it is also to his advantage if his partner were to act wrongfully or if there is a change in partners, since in LLPs, partners are not liable for losses to outsiders arising from acts of another partner as compared to an unlimited liability if he were to go into a Partnership.\r\nIn addition, the LLP is also not subject to full financial report and disclosure requirements, such as those on capital contributions and changes to capital (ACRA, 2005). This is an advantage to Mr. Tan’s business. Since the business is small, minor changes to capital will not have to be subjected to full reporting and disclosure. Furt hermore, as mentioned earlier, LLPs are tailored for accountants.\r\nWith that, our group is certain that Limited Liability Partnership Organization will meet the needs of Mr. Tan’s new consultancy business.\r\nBibliography\r\nACRA. (2005, May). Retrieved February 5, 2012, from ACRA Legal subscribe Issue 8: http://www.acra.gov.sg/NR/rdonlyres/4B52C6B6-E89B-4DC3-A72C-A9C4BC62AAAB/10278/ACRA_LDI_08.pdf\r\nAdrain. (2010). The company warehouse. Retrieved 2012, from The company warehouse: http://blog.thecompanywarehouse.co.uk/2010/03/01/advantages-and-disadvantages-of-partnership/\r\nASSAR, R. (2011). Publish Your Articles. Retrieved February 2012, 6, from PublishYourArticles.org: http://www.publishyourarticles.org/knowledge-hub/business-studies/what-are-th\r\ne-characteristics-of-partnership.html\r\nenterAsia Information Services Pte Ltd. (2010). entersingaporebusiness. Retrieved Feb 05, 2012, from LTD Singapore: condition up a limited liability partnership (LLP) in Singapore: http://www.entersingaporebusiness.info/limited-liability-partnership.php enterAsia Information Services Pte Ltd. (2010). How to set up a partnership in Singapore. Retrieved Feb 05, 2012, from entersingaporebusiness: http://www.entersingaporebusiness.info/partnership.php\r\nHowell, R. (2012). Hearst communication theory Inc. Retrieved February 6, 2012, from Hearst Communications Inc.: http://smallbusiness.chron.com/characteristics-limited-liability-partnership-3729.html\r\nJanus Corporate Solutions. (2008). Singapore Limited Liability (LLP) Registration. Retrieved February 4, 2012, from guidemesingapore: http://www.guidemesingapore.com/incorporation/other/singapore-llp-registration-guide\r\n'