Business Mediums
Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Separate legal No No Yes Yes Yes
personality?
Liability Unlimited liability for Partners are personally liable Members have no Members have no personal liability for the debts
the sole trader. They are for all the debts of the personal liability for and liabilities of the company. Shareholders in
(Who and for how
personally liable for all partnership. Presumed to be the debts and liabilities ltds and plcs have limited liability to the amount
much?)
the debts of the joint and several (means of the LLP. unpaid on shares/they agreed to pay.
business. each one liable for the full
amount). May be liable to contribute if they committed a
On a winding up, wrongdoing
members are liable to
contribute to the LLP Note: directors protected by separate legal
the amount (if any) personality, but possible liability for breach of
agreed in the LLP duties.
Agreement.
Owners Sole trader themselves At least 2 partners. At least 2 partners. The At least 1 shareholder.
owns the business, “partners” are called
(Who and how
benefits from profits, “members”.
many?)
and bears any losses.
Managers At least 1 (the sole At least 2 partners At least 2 members At least 1 director At least 2 directors
traders). They can
(Who and how Qualified secretary also
employ others.
many?) required
, Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Decision-making Sole trader only By a majority vote of the Same as for general Directors and shareholders (depend on the
partners (apart from 3 things partnerships. decision being made).
which require unanimity):
1. Introducing a new
partner
2. Changing the terms
of the PA
3. Changing the nature
of the business
Can be varied in a PA.
Each partner is an agent of
the firm and can bind the
firm unless they have no
authority whatsoever.
Ownership of Owned by the sole ‘Partnership assets’: not Partnership assets are Owned by the company because it is the entity
property and other trader in their own actually owned by the owned by the LLP that owns assets.
assets name. Business assets partnership, but by the because it has separate
and personal assets are partners personally. legal personality.
treated the same for
legal purposes.
Accounts (are they No accounting or public No public disclosure
produced, audited, disclosure requirements requirements. Accounts will
Yes, audited, and published accounts.
and published?) and be produced though.
Only name and address
publicity of Records at Companies House are open to public inspection
for service must be Only names and addresses
information
disclosed. for service must be
disclosed.
, Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Security
(What types can be Fixed security only Fixed and floating security
granted?)
Duties imposed on None other than the Duties under partnership Duties under members’ Statutory duties under Companies Act 2006 &
managers by law general law. agreement (including agreement. Fiduciary Insolvency Act 1986
implied duties under PA duties. Some statutory
1890). duties under the
Insolvency Act 1986 as
Fiduciary duties: utmost per reg. 5 LLPR 2001
good faith, not to make a
secret profit.
Termination At will. The sole trader Terminated with immediate An LLP will NOT Application to the registrar to strike off the
can cease trading at any effect by a partner giving the automatically dissolve company if the co has not carried on any activity
time. other partners notice, which on the death of a for three months; voluntary or compulsory
can be oral. Also dissolved by partner (unlike a liquidation.
death, bankruptcy, or general partnership).
illegality and, if entered into
for a single undertaking, by Application to the
the termination of that registrar for voluntary
undertaking. striking off, subject to
various conditions such
Can be modified by a as a majority of the
partnership agreement. members signing the
application.
, Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Constitution (if any) None Some rules under PA The LLP Regulations Detailed rules under CA 2006
2001, and LLP
Often supplemented with a
(Application of
PA
Companies Act 2006) Articles of association are required
Regulations 2009
imposes almost of all
of the rules for
companies onto LLPs.
Often supplemented
with an LLP agreement
Incorporation None. Other than None. Arises as soon as two Formed by filing a File form IN01 at Same as Ltds.
formalities (if any) registering with HMRC. or more people are ‘carrying series of documents Companies House with
+ £50,000 is the
on a business in common with the Registrar of the applicable fee
minimum allotted
with a view of profit’. Can Companies at
Memorandum of share capital
opt for your own Partnership Companies House
association required
Agreement (Form LLIN01) and
paying the applicable Articles required unless
fee. using default articles
Type of tax Income tax on trading Partners are taxed separately Income tax Corporation tax
profits as a self- as self-employed individuals
employed person. paying income tax on their
share of the profits of the
partnership.
If any partners are
companies, they may be
liable for corporation tax on
their share of the profits
instead.
Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Separate legal No No Yes Yes Yes
personality?
Liability Unlimited liability for Partners are personally liable Members have no Members have no personal liability for the debts
the sole trader. They are for all the debts of the personal liability for and liabilities of the company. Shareholders in
(Who and for how
personally liable for all partnership. Presumed to be the debts and liabilities ltds and plcs have limited liability to the amount
much?)
the debts of the joint and several (means of the LLP. unpaid on shares/they agreed to pay.
business. each one liable for the full
amount). May be liable to contribute if they committed a
On a winding up, wrongdoing
members are liable to
contribute to the LLP Note: directors protected by separate legal
the amount (if any) personality, but possible liability for breach of
agreed in the LLP duties.
Agreement.
Owners Sole trader themselves At least 2 partners. At least 2 partners. The At least 1 shareholder.
owns the business, “partners” are called
(Who and how
benefits from profits, “members”.
many?)
and bears any losses.
Managers At least 1 (the sole At least 2 partners At least 2 members At least 1 director At least 2 directors
traders). They can
(Who and how Qualified secretary also
employ others.
many?) required
, Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Decision-making Sole trader only By a majority vote of the Same as for general Directors and shareholders (depend on the
partners (apart from 3 things partnerships. decision being made).
which require unanimity):
1. Introducing a new
partner
2. Changing the terms
of the PA
3. Changing the nature
of the business
Can be varied in a PA.
Each partner is an agent of
the firm and can bind the
firm unless they have no
authority whatsoever.
Ownership of Owned by the sole ‘Partnership assets’: not Partnership assets are Owned by the company because it is the entity
property and other trader in their own actually owned by the owned by the LLP that owns assets.
assets name. Business assets partnership, but by the because it has separate
and personal assets are partners personally. legal personality.
treated the same for
legal purposes.
Accounts (are they No accounting or public No public disclosure
produced, audited, disclosure requirements requirements. Accounts will
Yes, audited, and published accounts.
and published?) and be produced though.
Only name and address
publicity of Records at Companies House are open to public inspection
for service must be Only names and addresses
information
disclosed. for service must be
disclosed.
, Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Security
(What types can be Fixed security only Fixed and floating security
granted?)
Duties imposed on None other than the Duties under partnership Duties under members’ Statutory duties under Companies Act 2006 &
managers by law general law. agreement (including agreement. Fiduciary Insolvency Act 1986
implied duties under PA duties. Some statutory
1890). duties under the
Insolvency Act 1986 as
Fiduciary duties: utmost per reg. 5 LLPR 2001
good faith, not to make a
secret profit.
Termination At will. The sole trader Terminated with immediate An LLP will NOT Application to the registrar to strike off the
can cease trading at any effect by a partner giving the automatically dissolve company if the co has not carried on any activity
time. other partners notice, which on the death of a for three months; voluntary or compulsory
can be oral. Also dissolved by partner (unlike a liquidation.
death, bankruptcy, or general partnership).
illegality and, if entered into
for a single undertaking, by Application to the
the termination of that registrar for voluntary
undertaking. striking off, subject to
various conditions such
Can be modified by a as a majority of the
partnership agreement. members signing the
application.
, Sole traders General Partnerships Limited Liability Private Limited Public Limited
Partnerships Companies Companies
Constitution (if any) None Some rules under PA The LLP Regulations Detailed rules under CA 2006
2001, and LLP
Often supplemented with a
(Application of
PA
Companies Act 2006) Articles of association are required
Regulations 2009
imposes almost of all
of the rules for
companies onto LLPs.
Often supplemented
with an LLP agreement
Incorporation None. Other than None. Arises as soon as two Formed by filing a File form IN01 at Same as Ltds.
formalities (if any) registering with HMRC. or more people are ‘carrying series of documents Companies House with
+ £50,000 is the
on a business in common with the Registrar of the applicable fee
minimum allotted
with a view of profit’. Can Companies at
Memorandum of share capital
opt for your own Partnership Companies House
association required
Agreement (Form LLIN01) and
paying the applicable Articles required unless
fee. using default articles
Type of tax Income tax on trading Partners are taxed separately Income tax Corporation tax
profits as a self- as self-employed individuals
employed person. paying income tax on their
share of the profits of the
partnership.
If any partners are
companies, they may be
liable for corporation tax on
their share of the profits
instead.
