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Dear Fred and Len Removal Firm.
I am writing in response to your letter about becoming a partnership or a limited company. It is difficult to say what is best for your company, however I shell help you as much as possible by giving you the pros. and cons. for both possibilities.
One of the main problems with a partnership is that if the company fails both of you as partners will be liable for repayments of debt etc. Never the less the advantage of being a partnership is that you as partners can work together to work out the best way to solve problems and improve the business. You will also be able to work as a team to raise money to expand your business
The major benefit of being a limited company is that you will only be liable for the money that you have invested in the company and only the money u have invested nothing else. However this is also a risky option, because there may be disagreements between you as the manager and the shareholders as they will also want a say in how the business is run. To add to this the profits will have to be split between you as well as the shareholders, unlike in a partner ship where it is split equally in the ratio of the money invested.
Another down factor for becoming a partnership is that the profit that is made will have to be split two or more ways, furthermore if you two cannot agree on a certain affairs then this could cause arguments and the business is there fore more likely to fail
There will definitely be a benefit in becoming ether a limited company or a partnership as it will raise capital to help expand your business. In my opinion, becoming a limited company and taking advice from your share holders will be the best option to choose. I think this because you will not be liable for any loss in excess of the value of the company and you will have a greater say in how the company is run. As apposed to the other options of becoming a partnership where you will be fully liable and will only have a 50% say in how the company is run.
Yours sincerely
J. Smith
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