Partnerships are one of the most prefered business legal structures in Ireland. This is because partnerships offer a more flexible and less expensive business structure than other business agreements. The upside to a partnerships is that the partners receive both profits and losses directly and as result they do not face double taxation incured through a corporation. The two most common types of partnerships in Ireland are General Partnership and Limited Partnership. These two partnerships have different terms and conditions and should not be confused.
General Partnerships
This partnership comprises of at least two or more people jointly starting a business entity together. Every person is responsible for any decisions and debts pertaining to the firm. The partners do not have a limited liability thus there is the potential for inclusion of partners’ assets in litigation against the business as a means to pay back amounts overdue if the entity becomes bankrupt. Legally binding prosecution against any of the partners for the company’s debts is possible in this type of business. This type of Partnership is usually implemented by law firms. Sharing of profit proceeds happens in accordance with the respective equity owned by each partner. Audits are not obligatory in these partnerships and filing accounts is not a prerequisite.
Limited Partnerships
They also share some similar properties as general partnerships apart from the fact that they can be operated with a minimum of one partner who has unlimited liability and at least one or more owners whose partnership liability cannot exceed their financial investment. It's possible that the general partners can be limited companies. Limited partnerships are obliged to comprise not less than a single general partner and another single partner whose liability is limited. The maximum number of partners is 20. However, for Limited Partnerships who are banking institutions, the maximum is 10 partners. General partners are legally responsible for meeting every amount of outstanding debts and other obligatory requirements pertaining to their business. Partners with limited liability weigh in with a stipulated sum of monetary investment and are exempt from the partnership’s debts exceeding the contributed amount. These partners also gain from benefits arising from tax and privacy policies in such a type of business.
The Limited Partnership Act of 1907 governs the administration and regulation of limited partnerships. The limited partnership cannot exist as a lawful persona detached from its founding partners and the reservation of limited liability is exclusively for limited partners. It is mandatory for this type of business to include not less than one partner who possesses unlimited liability, commonly referred to as a general partner. The general partner should have a liability that will not surpass the money they invested into the entity. Partners draft a partnership deed that stipulates the partners’ privileges and responsibilities, terms, and conditions on which the limited partnership operates.
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