There is a clear distinction between partnerships and companies. The choice of vehicle will be determined by a number of factors.
In a sole trader ship, there is no legal distinction between the individual and the business.
Partnership is the relation which subsists between persons carrying on a business in common with a view of profit. A traditional partnership is not a separate legal person distinct from its members; it is merely a relation between persons.
Partnerships can be formed very informally, but there may be complex formalities to ensure clarity.
Partnerships may be terminated by passing of time, termination or the underlying venture, death, bankruptcy of u partner, Illegality, notice, agreement or by order of the court.
Regarding external relationships of the partnership, the key issues are: partner’s authority to contract, and liability of partners for the acts of fellow partners.
Professional people often have to use the partnership form. Global partnerships carry risks for partners, so commonly an international affiliation of national partnerships is used or a licensing arrangement.
Legal Responsibilities and Insurance
When you run a business you have legal responsibilities. These responsibilities include paying taxes, obeying regulations regarding employees, getting licenses and permits, following lease and other contractual agreements. Insurance for your business will also be discussed. Some lines of business also require insurance coverage by law. It is your responsibilities to learn about the legal requirements that affect your business. You do not need to know all the laws and regulations in detail, but you should find out which ones concern you.
What are your legal responsibilities?
You will be affected by a number of different taxes when you run your own business. Taxes are part of running u business and they apply to everyone. Your business will collect and administer some taxes for the authorities, for example sales tax or value added tax and employees Income tax. These taxes are paid by the customers and employees. Your business collects them and delivers them to the authorities.
Other taxes are paid by the business itself. The most important is the tax paid on the business profits. Depending on which form of business you are running this tax will be charged to you as the owner or to the business itself. There are also other taxes that your business will have to pay such as sales tax or value added tax when you buy products or services from other businesses.
If your business employs staff you have to fulfill your obligations as an employer.
Find out what labour laws and regulations there are in general and if any special regulations apply to your line of business. Among the areas that are covered in laws and regulations are:
• Minimum wages
• Working hours
• Occupational safety and health
• Sick leave.
Licenses and Permits
Many businesses will need a license from the authorities to operate. Find out if you need a license and where to get it.
For some businesses, there may also be special permits needed to operate. Find out if this will apply to your business.
There are always risks involved in running a business. The types of risk vary with the type of business you are running. Risks such as you drop in the demand or your product or service are part of running a business but other types of risk call be offset through a sound Business Insurance. If you have insurance for your business it will give you some financial security against different kinds of incidents.
Not everything can be insured, but for example:
Property, such as machines, stock and vehicles, can be insured against theft
Property can be insured against damage caused by fire or accidents.
You and your employees can be insured against accidents and medical expenses.