Business Partnership Assignment 2022

Running head: ASSIGNMENT 1
ASSIGNMENT 1
Name of the Student
Name of the University
Author Note

ASSIGNMENT 1
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Part A: Written Report on Partnership and Company form of Business Structure
The following report shall discuss the important aspects of setting and running a
Partnership and a Company form of business structure and various information about the
operational heads of the two types of business structure.
Cost, Administrative and Regulatory burden of setting up and running Partnership and
Company
Partnership
In a general partnership, the partners shall have the equal burden to carry the cost of
setting up the business along with carrying the administrative and regulatory works for the
business, unless otherwise agreed and mentioned in the partnership agreement or deed. The
cost of setting up the business starts with acquiring an Australian Business Number (ABN)
and then subsequently registering it with the Director of the Consumer Affairs Victoria
(CAV) in case of limited and incorporated limited partnership1. However, a formal
partnership agreement and registration of a general partnership is common but not
mandatory. A partnership has its own Tax File Number (TFN) along with the ABN in order
to lodge its tax return separately for the ATO to assess it. The partners shall be liable to pay
income tax individually, out of the profit incurred from the business. The partnership shall be
liable to file Good and Services Tax (GST) if and when the turnover crosses $75,0002.
In case the partners plan to register the business, they shall be liable to lodge it before
the Director of the CAV. To register, the specific number of partners must first be
determined. There must a consensus between the partners in regard to their investment,
liability, profit sharing proportion, dispute resolution methods and method of dissolving the
1 Partnership Act 1958, s 54(1).
2"Partnership", Business.Vic.Gov.Au (Webpage, 2020)
<https://www.business.vic.gov.au/setting-up-a-business/business-structure/partnership>.

ASSIGNMENT 1
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partnership, which will be subsequently mentioned in the partnership agreement3. Checking
the name of the partnership not to be clashing with another registered trademark and then
registering the business before the CAV. Lastly, the partners need to apply for necessary
permission and licence along with the appropriate insurance for the business. Post-
registration, it needs to mention ‘A limited partnership’ next to the name of the partnership4.
Company
A Company has a separate legal entity, which could be private, public or even ‘one-
person company’ as discussed in the Corporations Act 20015. It is a more complex as well as
expensive business structure in terms of registration and operation, for it involves high
operation cost. The revenue earned in the course of business belongs to the company and the
directors and shareholders draws salary or remuneration on a regular interval. Like all other
businesses, a company is also supposed to have ABN and TFN to operate as a legal entity.
The company is required to file annual tax returns with the ATO6. It also requires the
directors and shareholders to complete an annual review of the company and pay an annual
review fee, along with giving declaration of solvency, every year. A company business
structure gives a wider scope to incur financial help from various financial institutions,
without a strict loan or mortgage scheme. It is also open to a wider access to capital, in case
of a public company. A company must register for GST if its turnover is over $75,000, while
it is $150,000 for non-profit organisations7.
3 "Setting Up A Business Structure | ASIC - Australian Securities And Investments
Commission", Asic.Gov.Au (Webpage, 2020) <https://asic.gov.au/for-business/small-business/starting-a-small-
business/setting-up-a-business-structure/>.
4"Types Of Limited Partnership", Consumer.Vic.Gov.Au (Webpage, 2020)
<https://www.consumer.vic.gov.au/licensing-and-registration/limited-partnerships/what-is-a-limited-
partnership>.
5 Corporations Act 2001 (Cth)
6 "Company", Business.Vic.Gov.Au (Webpage, 2020)
<https://www.business.vic.gov.au/setting-up-a-business/business-structure/company>
7 Ibid.