How Can I Limit My Liability As A Partner?

A partnership is an arrangement in which two or more individuals share the profits and liabilities of a business venture. Various arrangements are possible: all partners might share liabilities and profits equally, or some partners may have limited liability. Not every partner is necessarily involved in the management and day-to-day operations of the venture. In some jurisdictions, partnerships enjoy favourable tax treatment relative to corporations.
Posted 10 months ago  |    0  | 
Corporate Law,General Legal
Corporate Law General Legal

1 Answer(s)

Harshit Bhurani

In general partnerships a partner’s liability is joint and several. That means that he or she is liable individually for all the debts and liabilities of the firm irrespective of their share of the partnership. In this case it is normal for partners to give indemnities to each other so that if a creditor pursues one partner, he or she can then claim their share back from the other partners. It is usual for salaried or fixed equity partners to have indemnities from all the equity owning partners in the firm to protect them. The easiest way to limit your liability as a partner is to incorporate your partnership into a Limited Liability Partnership (LLP) where, as the name implies, your liability will be limited.

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