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

Business Structure 3
with the help of an attorney (Schwarz et al., 2017). It also provides a sense of security in
regards with monetary aspect to the partners as the profits and losses are both in the hands of
the partners only (Fyffe, 2019).
Disadvantages: Partnership
The only disadvantage in partnership relates to unlimited liability of partners. Also, the
capital can be raised only from conventional sources like banks and financial instructions,
instead of the public as is possible in company form of business structure.
Verdict: Partnership
Favourable as Warwick trusts Sunny, both want control over business, not as risky structure
if everything managed properly and ease of running business.
Best option: Recommendations
Partnership is hassle free form of business structure and meets the requirements of the clients
(Loertscher & Wasser, 2019). It will not only provide assistance in regards with the control or
power concerning the business as such; but would also pose as a convenient option in cases
as such where the partners would want other people to join in as partners as well or in general
introduce new people in the business as additional partners (Kahal, 2017). By adhering to the
relevant partnership act, the partners can avoid any breach of law, ensuring that the business
stays risk free (Australian Capital Territory, 2015).
Conclusion
Thus, despite all the other structures such as a company, partnership and sole proprietor, the
most apt option here is to go for a partnership business structure as it provides all the
facilities that the two individuals need.

Business Structure 4
Bibliography
Australian Capital Territory, 2015. Partnership Act 1963. [Online] Available at:
www.legislation.act.gov.au › DownloadFile › current › PDF [Accessed 27 January 2020].
Bell, C.D. & Schneider, 2016. Dealing with the New Partnership (and LLC) Audit Rules.
Ann. Tax Conf., 62, p.1.
Biech, E., 2019. The New Business of Consulting: The Basics and Beyond. John Wiley &
Sons.
Clifford, D. & Warner, R., 2017. Form a Partnership: The Complete Legal Guide.
Cohen, E., 2017. CSR for HR: A necessary partnership for advancing responsible business
practices. Routledge.
Fyffe, G., 2019. Canada and the Five Eyes Partnership. The Journal of Intelligence, Conflict,
and Warfare, 1(3), pp.12-12.
Geddes, M., 2017. Partnership Development Strategy: Governance, Resources and Staffing.
In Making Public Private Partnerships Work. Routledge. pp.71-88.
Griggs, L., Cho, G., McLaren, J. & Scheibner, J., 2018. Commercial and Economic Law in
Australia. Kluwer Law International BV.
Kahal, A., 2017. Limited Liability Partnership: An Emerging Business form for
Entrepreneurs.. International Journal of Engineering and Management Research (IJEMR),
7(3), pp.654-57.
Loertscher, S. & Wasser, C., 2019. Optimal structure and dissolution of partnerships.
Theoretical Economics, 14(3), pp.1063-114.

Business Structure 5
Schwarz, S., Lathrope, D. & Hellwig, B.J., 2017. Fundamentals of Business Enterprise
Taxation: Cases and Materials. West Academic.
Steingold, F.S. & Steingold, D., 2019. Legal guide for starting & running a small business.
15th ed. NOLO.