The document compares partnerships and limited companies, outlining the structure, responsibilities, taxation, and liabilities of each. In partnerships, all partners share profits and losses and have personal liability for business debts, whereas limited companies are separate legal entities with owners not personally liable for debts. Limited companies can raise capital more easily and are subject to corporate taxation, while partnerships have simpler tax reporting requirements.

1. Partnership vs. Limited
company
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2. Partnership
 Express or implied agreement by two or more
individuals to start a common business for making
profit
 All partners contribute capital, labor, skill or property
 Ways of contribution depend on agreement.
 Also share the profits and losses
 Firm must file information returns to report its
income, gains, losses, and deductions as a result of
operations yearly.
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3. Partnership
 No payment of annual income tax.
 Each partner required to include his/her share of
business income or loss in tax returns.
 Each partner sets aside sufficient money to pay taxes
on their share of annual profits.
 Implies partners must approximate the amount of tax
payable for the year and pay to the HM Revenue and
Customs.
 Partners pay taxes whether business makes profits or
not
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4. Partnership
 Relatively easy to set up and run
 As long as partners have a common understanding of
how to manage it.
 Each partner has his/her responsibilities as per the
agreement.
 Raising capital solely the duty of partners.
 General partnership: all partners have liability for their
actions, decisions, and business debts.
 Implies that their properties can be seized if business
defaults on debts.
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5. Partnership
 Limited partnership: liability of some partners is
limited.
 These are not liable to business debts.
 Limited Partnership Act 1907 mandates that even in a
limited partnership, one partner must have the full
liability for the business.
 Limited Liability Act 2000 limits the liabilities of all
partners
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6. Limited company
 Has special status in law
 Is incorporated – has own identity unique from
owners.
 Can sue or be sued or own property in own right
 Ownership categorized into equal parts, referred to as
shares.
 Owners cannot be held personally responsible for
debts.
 Owners’ property cannot be taken if business defaults
on debts.
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7. Limited company
 Owners need not to be involved in day-to-day running
of business.
 Owners can seek help from outsiders to raise capital.
 Company pays tax - a fixed percentage of profits made.
 Owners paid a salary by company, have obligation to
pay income tax
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