6 advantages! 6 disadvantages! Of Registered Limited Partnership

15/03/2024

Starting a business is exciting. But deciding on the right type of business is equally important. One of the popular business models is Limited Partnership (Limited Partnership) This article will analyze 6 advantages and 6 disadvantages of registering a Limited Partnership in comparison with other business forms such as natural persons and juristic persons as a guideline for deciding on the appropriate type of business.

Registered Limited Partnership means a legal entity established by 2 or more people jointly investing to conduct business. The registered capital is separated from personal funds. Each partner is responsible for the debts of the limited partnership. In proportion to the amount of capital invested

6 advantages of registering a limited partnership

Registering a limited partnership (LP) has many advantages as follows:

1. Reliability

Registration makes the partnership a legal entity. Separated from the person of the partner. It has a positive effect on the image and credibility of customers, partners and investors.
Information about limited partnerships will be made public through the Department of Business Development. Helps relevant people review information and make decisions with confidence, as well as showing seriousness and stability in conducting business.
Increase your chances of getting big jobs from government agencies or large companies as well.

2. Limitation of Liability

This type of partnership is responsible only for the amount invested. No personal property is required to pay off the partnership's debts.
Distinguish personal property from partnership property.
Protect your partners' personal assets in the event of business problems. and reduce the risk to individuals and families

3. Fundraising

Limited partnership form It allows investors to participate without taking on the full responsibility.
Partnerships can issue additional shares to raise capital. Or easily find new partners to expand your business.
Can raise funds from investors more easily with legal entity status It increases the opportunity to expand the business.

4. Management

Partners can divide work according to their aptitudes and expertise. Helps to make management efficient
The direction and strategy of the partnership is determined by a majority vote of the partners.
There is a clear management structure.

5. Tax benefits

Partnerships pay corporate income tax. It is separated from the personal income tax of the partnership. and pay taxes at a lower rate than paying taxes as an individual
Able to plan taxes effectively
Helps reduce the burden of tax expenses.

6. Other benefits

Participating in government projects Limited partnerships have easier rights to participate in government support programs than individuals.
Partnership registration is sustainable. This is because the business can continue to operate despite a change in partnership.
You can apply for a license to operate certain types of businesses.
Can file a lawsuit on behalf of the limited partnership.
Easier to apply for loans from banks

6 Disadvantages of registering a limited partnership

Registering a limited partnership (Ltd.) also has disadvantages as follows:

1. Registration process

It can be a complicated process if you do it yourself. There are many steps required to prepare documents and follow legal procedures. Another option is Using the company registration service FDI Accounting & Advisory Ready to give advice at every step with over 28 years of experience.
It may take 1-2 weeks or more, depending on the completeness of the documents.

2. Partners' responsibilities

Responsible for the debts of the partnership Limited investment amount
Cannot be sued to seize personal property.
It's a safe option. But there are limitations.

3. Administrative structure

Decision making must be based on the approval of the partners. This can make the process more difficult and time consuming.
The division of labor depends on the agreement of the partners. If there is an unclear structure, conflicts may arise.

4. Fundraising

Increasing capital requires consent from all partners. which may be complicated
Attract investors If the partnership structure is not interesting It may cause a lack of trustworthiness. or limited investment

5. Rules and restrictions

There are specific laws for limited partnerships.
Restrictions on operating certain types of businesses
Burden of compliance with the law

6. Other aspects

Required to disclose financial information to the public This causes a lack of privacy and, in some cases, a disadvantage to competitors.
Image and credibility Less than a limited company
Restructuring changes require the consent of all partners.

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