Compare general, limited, and limited liability partnerships. Formulate reasons as to why a
group of prospective partners might choose each. (4 points)
General Partnership:
- In a general partnership, all partners are equally responsible for the debts and liabilities of the business.
- Partners have equal control and management rights in the business.
Prospective partners might choose a general partnership if they want a simple and easy business structure with equal decision-making power among partners.
Limited Partnership:
- In a limited partnership, there are both general partners who have unlimited liability and limited partners who have limited liability up to the amount of their investment.
- Limited partners do not have control or management rights in the business.
Prospective partners might choose a limited partnership if they want to invest in a business without taking on unlimited personal liability for the business's debts.
Limited Liability Partnership (LLP):
- In a limited liability partnership, all partners have limited liability for the debts and liabilities of the business.
- Partners have the ability to participate in management and decision-making.
Prospective partners might choose a limited liability partnership if they want the protection of limited liability while still having some control and management rights in the business.