Advice on business structure for small business in fashion industry

Running head: BUSINESS STRUCTURE
BUSINESS STRUCTURE
Name of the Student:
Name of the University:
Author Note:

1
BUSINESS STRUCTURE
To
Mr. John
Sub: Advice on business structure to be used for small business in fashion industry
Respected Mr. John,
We came to know that you are planning to establish a small business in the fashion
industry and particularly you are interested to enter into the segment of men’s clothing (Burns,
Mullet and Bryant 2016.). In this letter, we will guide you for your business need. We will also
advice you for the establishment in brief to avoid any misunderstandings and future
complexities. You want to know which business structure will be perfect for your business idea
and thus we will advise you to choose the appropriate business structure and help you to
incorporate your business to avoid any legal issues and business risk in future (Sadgrove 2016).
Among various business structures present, we will be informing you about few basic
structures that may be perfect to your business idea.
 Sole proprietorship
 Partnership
 Joint ventures
 Company

2
BUSINESS STRUCTURE
As suggested by the name, a sole proprietorship is controlled by a single person. Since
you want to manage your business alone, you can opt for this type of structure (Valencia 2016).
If you select this, you will be having total control on the way you want to control your business.
Moreover, if you choose this structure, you will be an advantage of low costing because it is the
cheapest form of business. No cost of registration will be required in this type. The business can
run smoothly by using your personal name only. The legal aspects will be comparatively less
than other business structures. However, there are some concerns that must be considered.
Firstly, you and your business will have no difference. There will be no limited liability in sole
proprietorship (Valencia 2016). It indicates that you and your business will be having same
liability. All the losses incurred by the business will be subjected to you. Secondly, since your
income and income out of your business will be assessed together, you may fall in the upper tier
of taxation for which you have to pay more tax. Moreover, your personal assets will be rendered
risky if this business structure is being chosen by you. Thus considering its pros and cons, we
will not advice you to opt for this type of business structure as it will risky to personal liabilities.
There is another business structure that you can choose is the partnership structure. As
per the nomenclature, it is carried out by two or more persons who are known as partners if one
another (Tikhomirov et al. 2016.). The business can be or cannot be registered but it is liable to
the provisions containing rules of the Partnership Act 1963 (Cth) or the rules enumerated under
the Common law. If you want to choose partnership structure for your business you have to
conduct your business with another person (s). The cost of establishing the business will be low
comparatively as the registration is not compulsory. Moreover, the process of formation as well
as registration is also very simple. However, a partnership deed is to be created which will
comprise of the rights and duties and other terms of the partnership business and the partners will