General partnership

Question 1

what is the definition of a partnership?

Answer 1

two or more persons carrying on business in common with a view to profit

Question 2

which entities cannot be a GP?

Answer 2

Charitable and not-for-profit organisations

Question 3

what governs a partnership?

Answer 3

The GP is governed by the Partnership Act 1980 & common law (except where the common law conflicts with the PA) unless there is a written partnership agreement

Question 4

what is the tax liability of a GP?

Answer 4

Each partner pays tax on their share of the profits (individual partners pay IT + CGT, companies pay corporation tax)

Question 5

what are the advantages of a GP? (5)

Answer 5

• No formation requirements so it is easier + less expensive to start
• No filing requirements
• No obligation to publicly disclose any information
• Can choose management structure by agreement
• No obligation to publicly disclose information

Question 6

what are the disadvantages of a GP? (2)

Answer 6

• No SLP so unlimited liability - each partner is jointly and severally liable for the debts incurred whilst they are a partner
• No SLP so cannot hold assets in its own name