Differences between a limited liability company a partnership
|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.|
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