Basically there is a law based on business registration. According to this Act, the law governing partnership in Sri Lanka is the English law which consists of the Partnership Act, 1890. According to this Act, a partnership is the relationship which exists between persons carrying on a business in common for profit. . Say no to plagiarism. . Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essay The main strength of the ownership bond is the ability to raise more funds. This means they could have up to 20 partners according to one law. Borrowing power is high thanks to more homeowners. From time to time, businesses need more money. It could therefore be beneficial to bring together more partners for the company. Among the partners there will be competent people who will use their knowledge, skills and attitudes to succeed in the business. Additionally, at the individual level, partnerships are taxed. On partnership income, no business income tax is imposed. Partnership income is passed through to the partners and is taxed on the individual (or corporate if the partner is a corporation) income tax return. According to the scenario, Fernando and Perera want to open a restaurant. Let's assume that partnership documents would need to be filed with the state. At the end of the year, Fernando and Perera's restaurant will have to file a partnership tax return. There is no tax to pay on the partnership declaration. The partnership's income is shared between Fernando and Perera and each declares their share of the income on their individual tax return and pays taxes via their individual return. Even if a partnership is stronger, it also has weaknesses. The first concerns the passive. The liability of the partners is unlimited and any debts of the company may have to be covered by themselves. And also when a partner dies, the partnership is dissolved. This will result in the other partners having to share the losses and responsibilities of the business. The other weakness of a partnership is the difficulty of liquidating or transferring the partnership to third parties. A company that has liability limited to a certain value to the members is known as a limited liability company. The formal strength of a limited liability company is limited liability. This advantage results from the fact that the business is a separate legal entity from the owners with a clear ownership structure. No personal responsibility. This provides some protection for new businesses like Fernando and Pereras restaurants. Professionalism and prestige are the other strength of the limited company. It is a legally established and regulated entity. This often instills a trust in clients that may not be present when dealing with sole traders. And fundraising also becomes the strength of a limited company. It may be easier to obtain high-value credit from banks. However, on dividends the tax rate is lower. It may be possible to make a profit without paying a higher income tax rate. Sometimes certain tax incentives are only available to businesses, for example R&D relief and depreciation of intangible assets. There are also group rescues in several companies. Plus an HM Revenue and Customer approved share options scheme with tax incentives. Similar to partnership, the company..