A ‘private company limited by shares’ has a separate legal personality from that of its owners or shareholders – who put up the funds – and its directors, who run the company. This means if it is sued, the directors and owners are not normally liable as individuals.

A ‘public company limited by shares’, or PLC, must state in its constitution that it is public and include ‘PLC’ in its company name. Between them, the owners must invest a minimum amount of money for use by the company, currently £50,000. Each allotted share must also be paid up to at least a quarter of its nominated value. Unlike private companies, public companies can offer shares to the general public and apply to join the stock market.

A partnership is a business structure in which two or more individuals agree to share the profits and losses of a business. Partnerships can be formal or informal and are typically governed by a partnership agreement. In a general partnership, all partners are jointly and severally liable for the debts and obligations of the partnership, which means that each partner is personally responsible for the partnership’s debts.

A limited liability partnership (LLP) is a type of partnership in which each partner has limited liability for the debts and obligations of the partnership. This means that the personal assets of each partner are protected from the partnership’s creditors. An LLP is typically formed by filing a registration statement with the appropriate state agency, and it is governed by a partnership agreement.

The key difference between a partnership and an LLP is the level of liability protection offered to partners. In a partnership, partners have unlimited liability for the partnership’s debts and obligations. In an LLP, partners have limited liability, which means that they are only liable up to the amount of their investment in the partnership. Additionally, an LLP is typically required to have a designated managing partner who is responsible for managing the partnership’s operations.

In summary, while both a partnership and an LLP involve two or more individuals sharing the profits and losses of a business, an LLP offers greater liability protection for its partners than a partnership does.