How Three Friends Should Set Up Their Business

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Introduction This report entails a detailed analysis of how three friends should set up their business. It starts by the definition of a General Partnership (unincorporated) and Limited Liability Company (incorporated). It furthermore goes into the disadvantages and advantages of each as well as the comparison between both. It concludes with a recommendation as to how the friends should set up their business. Findings and Analysis General Partnership (Unincorporated) A general partnership can be defined as an unincorporated business relationship between two or more people who share the same amount of debts and liability accumulated by the company. In this type of partnership, every partner has limitless liability of responsibilities…show more content…
 In a general partnership, personal liability is limitless, but the damages committed while doing personal movements and actions not related to the business lies solely on the partner.  The actions committed by the partner while carrying out a function for the partnership would hold all partners accountable, irrespective of their input or contribution on the event. (Beatty & Samuelson, 2012) Advantages of a general partnership  The rights in a general partnership are showed by preceding agreements made by the other partners. There are no laws essential to partnership purposes such as decision making rights and voting. It is usually presumed that everyone has the same voting rights as partners, except there is a contract to the difference that lurches voting rights on contributions to related factors or partnership.  In a general partnership, liability insurance is obtainable to shield partners from each other. This is beneficial to the partner not at fault by protecting their personal assets. Due to the fact that this is one of the biggest risks of a general partnership or a sole proprietorship, this type of insurance is highly recommended.  Members of a partnership are anticipated to work in the interest of the company and notify the other members of the company when following a plan for one’s personal gain. Else, members of the partnership are grateful to work for the advantage of the other partners,
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