Pete's Lecture: Firms

Partnership: is where 2 or more people get together with the intent of supplying a good service.

. These are easy to start, as soon as you set up and agree on where you want to go you can start your partnership. 

. As a partner you will become liable for each others debts.

. Often partnerships would develop with one party having the money, the other would be the trader and have all of the ability. 


 Libity Liability Firm: This is an incorporated firm or company, what you put in you get back. If you put £10,000 into the investment then you are entitled to that amount. However, to ensure the potential investors were protected against various criminals, con-artists,fraudsters. Limited liability firms had and still must do certain things...

1. Publish what the firm is about
2. Publish annual returns (Losses Profit) 
3. Lodge this data with companies house (Government run repository) 
4. Have the accounts of the firm independently audited


Starting an LTD firm

Buy one "Off of the peg" from a solicitor. 2 weeks later you will be up and running.
Stopping a Ltd firm is more difficult. This firm in the eyes of the law is a person in their own right, what is the firms is the firms and not yours. You do what is best for your firm not yourself.


Issues of debt

All firms have a degree of debt. In essence they use other peoples money make a profit and then pay them back obviously keeping the profit that they have just made.

To manage debt effectively you must be able to manage costs. 
You MUST control money flows, 
You MUST know what has been spent on what, 
You MUST have a very good idea of what is going to be spent on what.