Limited Liabilty Partnership Essay Example | Topics and Well Written Essays - 2000 words

Limited Liabilty Partnership - Essay ExampleThese tradees are the most common and simplest ones since they on the nose have one owner who runs the contrast by himself and is self employed. These types of businesses are east to start since they do non require much, if not any, legal obligations, and paperwork.It is primary(prenominal) to note that the furbish up trader assumes the all the responsibility of the business. This includes looking after all the operations, issues, debts, loans and others. The problem with this business is that the sole trader has unlimited indebtedness for the business and in case of bankruptcy, the sole trader would have to pay off the debts and claims from his pocket or by selling off the companys assets and the sole traders assets as well (Hicks & Goo, pp. 13-18). Important here to note that the law does not provide the sole traders company, the status of a separate legal entity which other forms of business enjoy having. These businesses do not ha ve the option of equity financing or in simple wrangle issuing bonds and stocks for raising capital. Moreover, if the sole trader goes for debt financing, even then, the loan would be on his name and not on the companys name and he, not the company, would be liable for paying off the loan (Mancuso, pp. 65-69).The second type of business would be of partnerships where two or more partners jointly start their business and share the responsibilities and ownership of the business. Unlike sole proprietor where only one person is responsible for everything, in partnerships, all the partners share the responsibility of running the business. However, their liability remains unlimited. This is because of the fact that partners are liable for any decision whether taken by him or any other partner. Moreover, if one partner runs away than the catch ones breath would have to pay his or her debts liabilities from their pockets (Martin, pp. 41-49). These types of businesses are easy to form and e asy to dissolve as