There are many benefits of forming limitedliability partnership with partners. One of the advantages is limited liabilitypreserves the personal assets of partners from the business debts. This is becauselimited liability partnership is a separate legal entity to the members andthus partners’ assets will not be affected. Sherrie (2017) stated that it isalso more flexible in setting up the process by which the business is to be rununlike company requires to follow fixed and complicated process. There is abetter flexibility in the business management could be allowed. Partners also havethe power and right to decide on how they contribute to business operationsindividually. Moreover, it has less formality and regulations to follow about themanagement and structure of business compare to a company.
Limited liabilitypartnership also can enjoy perpetual succession. That is, if one of thepartners passed away, retired or leave the partnership, the partnership stillcan be continued to exist and operate. Aaron (2015) said that it is also moresimple and cheaper to incorporate and maintain because partners are notrequired to have Annual General Meeting (AGM), hire a company secretary andpresent audited financial reports. In addition, it is managed and controlled bycompliance officers or partners who responsible for decision making and tovote.
Lee (2015) mentioned that small businesses are likely to use limitedliability partnership. However,limited liability partnership also has disadvantages. That is, it is requiredto disclose accounts to the public. In this situation, they will have todisclose the financial information and accounts to public.
Furthermore, thecapital of limited liability partnership can only obtain from the members.Thus, their relatives and close friends have to become members first if theywish to raise capital from them.Besides that, private company is also another businessstructure which is suitable for the business of Sandy and Damian. Under Section2(a) of Companies Act 2016, private company refers to any company whichimmediately prior to commencement of the 2016 Act was a private company underany previous repealed written law. Under Section 2(b), any company incorporatedas private company under the act, or Section 2(c), any company converted intoprivate company under Section 41.