Unit 9 forms of business ownership

Partnership. A partnership is an unincorporated business organization (i.e. no separate legal identity) that is owned by two or more persons. Partnerships are governed by the Partnership Act 1890.Partnerships are formed under verbal or written contract or agreement. Written agreement is called “deed” or “articles of partnership”. It is not difficult to form a partnership, but it is wise to get the counsel of a lawyer experienced with such agreements. Partnerships are found in all areas of business activity, especially in law, accountancy and medicine.

There are several types of partnership: (1) unlimited partnerships (AmE general partnerships), (2) limited partnerships, and (3) master limited partnerships. A general partnership is a partnership in which all owners share in operating the big business and in assuming unlimited liability for the business’s debts. There are three key elements of any general partnership as (1) common ownership, (2) shared profits and losses, and (3) the right to participate in managing the operations of the business. A limited partnership is a partnership with one or more general partners and one or more sleeping or silent partners (AmE limited partners). A general partner is an owner (partner) who has unlimited liability and is active in managing the firm. A sleeping partner is a partner who invests in the firm, but does not participate in the management of the company and has limited-in the event of bankruptcy, a sleeping partner only loses his investment, not his personal assets. Limited liability means that sleeping (limited) partners are not responsible for the debts of the business beyond the amount of their investment-their liability (debts they must pay) is limited to the amount they put into the business ; their personal property is not at risk.

A new form of partnership, master limited partnership, looks much like a company (AmE corporation) in that act like a company and is traded on the stock exchanges like a company, but is taxed like a partnership and thus avoids the corporate income tax.

Partnerships offer certain advantages over sole proprietorships (traders):

• More financial resources. Partners bring additional funds to the partnership. Naturally, when two or more people pool their money and credit, it is easier to pay the rent, utilities, and other bills incurred by a business. A limited partnership is specially designed to help raise capital (money)

• Shared management. It is simply such more easier to manage the day-to-day activities of a business with carefully chosen partners. Partners can bring fresh ideas and different skills to a business organization.

• Little formality and expenses involved in the formation. Like sole traders, partnerships and relatively easy to form and are not subject to special taxation. However, partnerships have disadvantages as well

• Unlimited liability. Each general partner is liable for the debts of the firm, no matter who was responsible for causing those debts. If the business fails, its creditors (those to whom money is owed) have the right to recover their money from any, or all, of the partners.

• Difficult to terminate. Anytime a partner dies or withdraws from business, the partnership agreement must be drawn up.

• Limited capital. The amount of capital that a partnership can raise is limited by the earnings of the business ,the wealth of the partners, and their ability to borrow.

• Division of profits. Sharing the profits can cause conflicts among partners.

• Disagreements among partners. Partners may disagree, causing management conflicts that could threaten the firm’s existence.

Exercise: 1

Answer the questions. Begin your answer with:

j

I think/I believe that… As far as I remember…

I would like to say that… As far as I know…

I suppose that… If I am not mistaken…

Well, let me see… If I remember rightly…

1. What are three major types of business organization in the UK, the USA and the most countries?

2. How can a sole trader (sole proprietorship) be defined?

3. What are the advantages of a sole proprietorship?

4. What disadvantage does a sole proprietor have?

5. What type of business organization is a partnership?

6. What are three kinds of partnerships?

7. What are the advantages of a partnership?

8. What disadvantages does a partnership have?

Exercise: 2

Agree or disagree with the statements. Give your reasons. The following phrases may be helpful:

That’s right. On the contrary…

I entirely agree with you. I don’t agree/I can’t agree with you.

I think so/I believe so. It’s just the opposite.

That’s just what I think. I don’t think so.

Looks like that Well, I am not sure of it.

Most probably. That’s not right I’m afraid.

I am sure of it. I doubt it.

That goes without saying. I’m sorry I can’t give you the exact answer.

1. A business can be formed in several ways.

2. Each form of business ownership has advantages and disadvantages.

3. General and silent partners have the same roles and responsibilities.

4. The most important step in forming partnership is choosing the right partner.

. 5. Forming a limited company is less complex than forming a partnership.

6. The persons forming of company (the promoters) are not requited to submit several documents to the Registrar of Companies.

7. The registration of business entities in Ukraine is performed by local executive bodies (i.e., executive councils of deputies or state administrations).

Exercise: 3

Translate into English:

ВИДИ КОМПАНІЙ У США І ВЕЛИКІЙ БРИТАНІЇ Unlimited Partnership (англ.), General Partnership (амер.) (повне товариство)-це асоціація двох або більше осіб (у Великобританії до 20 осіб),що займається тим або іншим бізнесом з метою одержання прибутку. У Великобританії їхня діяльність регулюється законом про товариства 1890 року.На відміну від акціонерної компанії,товариство не є юридичною особою,тому партнери несуть необмежену відповідальність за зобов’язаннями товариства(усім своїм майном).

Limited Partnership (командитне товариство) включає основних партнерів (general, or full partners), які керують справами товариства і несуть повну відповідальність за його борги перед кредиторами, і партнерів з обмеженою відповідальністю (limited partners), які не беруть активної участі в управлінні товариством і несуть відповідальність за його борги тільки в розмірі свого внеску в товариство. У Великобританії діяльність таких товариств регулюється законом про товариства з обмеженою відповідальнітю 1907 року.