Business Structure: How to Choose the Right One -

Partnership
Business Structure
1/27/2020
University
Student Credentials

Business Structure 1
Issue
The key issue relates to establishing the best business structure for Warwick and Sunny.
Business Structures
There are many business structures which can be opted by a party to start their business.
These include sole trader, trust partnership, and company. (Griggs et al., 2018).
Advantages: Sole trader
 Full control in running business
 Profit goes fully to owner
 Privacy is maximum
Disadvantages: Sole trader
 Problems in arranging funds
 Unlimited liability
 Cannot work for two people
Verdict: Sole trader
Not suitable as two people want to set up a college
Advantages: Company
 Ability to raise money from public/ friends based on type of company
 Limited liability of shareholders
 Favourable taxation rates
 Perpetual existence
 Easy transfer of ownership

Business Structure 2
Disadvantages: Company
 No privacy as affairs of company are in public domain
 Expensive cost of running
 High compliances
 Profits distributed
Verdict: Company
Not favourable as control would be lost and capital is not an issue considering Warwick and
Sunny would provide the capital.
Advantages: Partnership
A structure of partnership can help the two individuals with a lot of things as they can
manage the profits by mutual decisions as the partners share profits in this structure. Both the
partners will not be answerable to any other party or person for that matter in comparison to
other business structures such as the company where involvement of shareholders is there
(Bell & Schneider, 2016). The decisions both the partners make will be the final ones
unlike other business structures. The partners also do not need to go through a long and
everlasting process of commencing a business structure and there is a lot less of paperwork
involved when a partnership structure is being incorporated (Clifford & Warner, 2017). In
partnership business structure, the partners have full control over the firm (Geddes, 2017).
In current times, the partnership structure in actually on quite boom due to its convenience in
the market of Australia (Cohen, 2017). In partnership the securities involved need not be
shared with any third person and there is no involvement of tax issues in regards with the
partners (Steingold & Steingold, 2019). Partners have to only worry about their own taxes
individually (Biech, 2019). It also is quite efficient in saving taxes and the legal provisions
related to the same can be changed whenever there is mutual agreement between the partners