DIFFERENCES BETWEEN A LIMITED LIABILITY COMPANY AND A PARTNERSHIP

DIFFERENCES BETWEEN A LIMITED LIABILITY COMPANY AND A PARTNERSHIP

September 24, 2018

 

LIMITED LIABILITY COMPANY PARTNERSHIP
1.     A limited liability company can be formed by one person and have up to 50 members. A partnership must be formed by at least 2 persons and membership cannot exceed 20, unless it is a firm of lawyers or accountants.
2.     A limited liability company is governed by the provisions of the Memorandum and Articles of Association. Partnerships are run by the provisions of the Partnership deed (Agreement), where same exists, as it is not mandatory for a partnership to have one.
3.     A limited liability company is a separate legal entity from its owners. i.e. it can sue and be sued separately from its owners. A partnership is not separate from the partners.   A partnership cannot sue or be sued separate from the individuals that form the partnership.
4.     A limited liability company’s assets by law are separated from the assets of the owners. When assets are to be sold to offset loans taken by the company, the assets of the company, not that of the owners would be sold, unless of course some of the owners used their personal assets as collateral for such loans. The assets of a partnership are not separated from the assets of the partners. To offset a loan taken by a partnership, assets of the individuals behind the business would be used.
5.     For taxation purposes, a company pays tax on its profits and directors are taxed on what they receive in remuneration from the company. A partnership is not taxed in its own right as a partnership is not a separate legal person. Instead, each partner is taxed on his share of the profit. Irrespective of how much or how little they have taken out of the business.
6.     A limited liability company has an unlimited lifespan, unless a date for dissolution is stated in the Company’s articles of association. A partnership business may come to an end if a partner decides to sell his ownership interest or if a partner dies.

Do you have any question or clarification regarding the topic in this post that was not provided by this post? Or you have questions regarding what the law states about a particular legal issue? Log on to our website – www.618bees.com or call us on 23412803791 to speak to any of our consultants that are always on hand to provide answers to such questions.

Best Regards,

Team 618 Bees

 

 

The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advice from the particular facts and circumstances at issue from a lawyer.This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached.

 

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Frequently Asked

  • When are Annual Returns due for filing?

    A company’s first Annual Returns are due for filing after 18 months of its inception, subsequently it should be filed annually as the name implies. The filing dates could differ for each company depending on their financial year end but must be filed not later than 42 days after its Annual General Meeting.

    The Annual Returns for Business Names is due not later than the 30th of June each year except in the year the business was registered.
  • What’s the difference between a business name and an LLC?

    • A business name is a sole proprietorship, usually owned and managed by one individual only. Legally, the sole proprietor and his business are one. It simply means an individual trading with an alias. The sole proprietor is personally liable for all business related obligations.

    • A limited liability company on the other hand is a separate business entity from the individuals that hold its shares and act as directors. Legally, it’s a separate business entity and a person on its own who can transact business, own property separate from its owners and can sue or be sued. 
  • If I have NAFDAC Registration number, do I still need SON registration number?

    SON Product Registration scheme is mandatory for all SON’s regulated products as mandated by SON Act 56 of 1971, 20 of 1984, 18 of 1990 as amended.

    This is irrespective of the registration done by NAFDAC
  • Can a minor be a company director?

    No, a minor cannot be a director. A minor under Nigerian Law is anyone who is below 18 years of age.
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