Forms of practice

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[edit] Introduction

There are three main types of practice:

1. Sole trader
2. Partnerships: traditional, limited partnership, limited liability partnership
3. Limited company

[edit] Sole trader

• Trade in own name
• Easy setup
• No legal structure
• Responsible for yourself so face the risks alone
• High personal risk - personally liable
• Can cease to exist easily.

[edit] Partnerships

[edit] Traditional Partnership

• Relation between 2+ people in business for profit.
• Governed by 'Partnership act 1890'
• Easy to setup
• Not registered with companies house - no public disclosure of accounts
• Joint & several liability - personally responsible for each others errors
• Should have 'Partnership agreement'
• Deed of adherence - signed by incoming partners to agree with partnership agreement.
• Partners not a cost of business unless salaried.
• Profit taxed then distributed to partners.
• Pay NI.
• Audited.

[edit] Limited partnership

• 1+ general partner- operates partnership - liable for debts and obligations.
• 1+ limited partners with capital but no liability as not running firm.
• Registered at Companies house.
• No public disclosure of accounts.
• Often used for SPV ( special purpose vehicle).
• Should have 'Partnership agreement'
• Deed of adherence - signed by incoming partners to agree with partnership agreement.
• Partners not a cost of business unless salaried.
• profit taxed then distributed to partners.
• Pay NI.
• Audited.

[edit] Limited Liability Partnership (LLP)

• Trade in company name.
• All partners can participate in management.
• Partners liability limited to assets in firm - not affected personally.
• Registered at Companies House.
• Accounts publicly disclosed.
• Partners not a cost of business unless salaried.
• Profit taxed then distributed to partners.
• Pay NI.
• Audited

[edit] Limited liability company

• Directors.
• Owners are shareholders. minimum 1 shareholder
• Liability limited to value of shares.
• Banks/ landlords may seek personal guarantees as liability may be too low.
• Registered at Companies House.
• Public disclosure of accounts
• Articles of association + memorandum: forms companies constitution.
• Shareholders have control over board of directors.
• Profits taxed.
• Dividends taxed.

[edit] Related articles on Designing Buildings Wiki

• Collaborative practices.
• Complex project.
• Consortium.
• Integrated project delivery (IPD).
• Joint venture.
• Limited liability partnership.
• Partnering.
• Partnering and joint ventures.
• Partnership.
• Public Private Partnership (PPP).
• Relationship management.
• Special purpose vehicles.
• Team management.

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