There are generally 5 types of business structures you can choose from if you’re starting a new business for profit:
Sole-proprietorship
General Partnership
Limited Partnership (LP)
Limited Liability Partnership (LLP)
Limited Liability Company (LLC)
To decide which business structure is most suitable for you, you will need to consider the following factors: –
How much capital you are prepared to invest?
How many owners there will be in the business?
What liabilities and responsibilities you are prepared to assume?
What risks you are prepared to take?
Whether a company of that structure will be easy to close?
Some of the main features of a General Partnership include the following: –
General Partnership:
A partnership is a business entity that is formed by at least 2 or more persons.
A partnership can only comprise a maximum of 20 partners. A partnership that comprises more than 20 partners must be registered as a company under the Companies Act.
The partners pay tax on their share of income from the partnership according to their own personal rates of income tax.
You can consider using a partnership if you feel that you can save money by paying tax based on your person rate of income tax because it is lower than the corporate tax rate (e.g. 17%).
A partnership is not a separate and distinct legal entity. As such, it is not entitled to sue and be sued in its own name or own land in its own name. Instead, the partnership can be sued in the names of individual partners.
In addition, it will not have perpetual succession (i.e. it will terminate upon the death or departure of the owners or partners). This is because only entities with perpetual succession can continue to exist and operate upon the death or departure of the owners without having to transfer property whenever there is a change of its ownership.
