Business Structure Presentation 2022

Business Structure

Overview
• When selecting “partnership” as a
business structure, understand of its
characteristics is important.
• It can be general and limited.
• Partners share equal profit and loss in
general whereas liability is specific to a
certain extent in limited partnership.
• You should also select limited partnership
for your business.

Setting up
• Registration not mandatory, but it will benefit the
partners.
• During registration, number of partners, capital
contribution and their authorities are specified
(Business, 2020).
• Filling for “Tax File Number” for separate income
tax filling.
• Application to collect licences and registration for
managing the business.
• Create a partnership agreement establishing
authorities, liabilities, profit sharing ratio and roles.

Partnership agreements
• Both oral and written
• Written are recommended since terms are
clearly specified to avoid vagueness.
• Easy resolution of dispute due to written
terms for roles, authority and
responsibilities. (LawDepot, 2020)
• Protecting minority and majority owners’
interest
• Makes it easier to determine future of the
business if one partner leave or dies.

Profit and Loss sharing
• Profits are distributed equally, unless
another profit sharing ratio is given.
• Losses are distributed in the ratio of
profits, unless decided otherwise.
• Partners can agree to distribute profits
based on their capital contribution in the
business.
• Any other ratio can also be specified.

Dissolution
• Insolvency of business, death or bankruptcy of
partner leads to dissolution.
• Court order or written notice by one partner can also
dissolve partnership business.
• When partners no longer own the business or when
their agreement expires (Hill, 2018).
• The revenue is used to pay off business’s debts and
then it is distributed equally among partners or in
their profit sharing ratio.
• No partner receive first share in the profits and they
receive equal share or as per their profit sharing
ratio.

References
• Business. (2020). Business Structures. Retrieved
from
https://www.business.gov.au/Planning/Business-
structures-and-types/Business-structures
• Hill, D. (2018). How to Dissolve a Business
Partnership. Retrieved from
https://australiandebtsolvers.com.au/research-
centre/dissolve-business-partnership/
• LawDepot. (2020). Create your partnership
agreement. Retrieved from
https://www.lawdepot.com/au/partnership-
agreement/#.Xp4n3WYzbDc