Introduction to Business Law: Case Study on Business Structures

Running Head: INTRODUCTION TO BUSINESS LAW 0
INTRODUCTION TO BUSINESS LAW

INTRODUCTION TO BUSINESS LAW 1
Contents
Introduction...........................................................................................................................................2
Case Study.............................................................................................................................................3
Sole proprietorship................................................................................................................................3
Advantages........................................................................................................................................3
Disadvantages....................................................................................................................................3
Partnership............................................................................................................................................4
Advantages........................................................................................................................................4
Disadvantages....................................................................................................................................5
Company...............................................................................................................................................5
Advantages........................................................................................................................................6
Disadvantages....................................................................................................................................6
Legal issues in forming these business structures.................................................................................7
Recommendations.............................................................................................................................7
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9

INTRODUCTION TO BUSINESS LAW 2
Introduction
The discussion of case study helps the reader in understanding the various aspects of
business structures. Single owner runs a sole proprietorship due to which he enjoys the
freedom of doing business. However, he has to face various problems such as unlimited
liability, difficult to change ownership. On the other hand, partnership is a formal agreement
between two or more person who wish to come together and run a business. Partnership firm
is the combination of various people that help in generating innovative ideas. However,
financial risk goes side by side with partners, as they are responsible for all profit and loss.
By forming a partnership firm, the innovative ideas are develop due to various persons but
there is financial risk goes back with the partners as they are liable for all the profits as well
as loss. Company is a legal entity that is designed by association of persons (Caramela,
2018). In the given report, a case study is prepared on these business structures with their
advantages and disadvantages. Each business structure has to face some legal issues that are
highlighted in the report.

INTRODUCTION TO BUSINESS LAW 3
Case Study
Sole proprietorship
A sole proprietorship is that type of business that is run through single person. The
control of the business entity lies with only one person that is biggest advantage sole trader
gets (Price, 2014). According to Baik & Lee, (2015) the sole proprietor business has no
separate presence from the owner. It means owner is accountable for all the liabilities as well
as profits. A sole proprietorship, as reported in the handbook of Korchak, (2017) is a business
of one owner who has unlimited liability. On the contrary Monte, (2017) stated that sole
proprietorship is the simplest form of business enterprise. Due to no separate entity of the
sole proprietor, he or she signs the contract in his or her name only. In the words of
Castledine, (2018) it is highlighted that there are few taxes and legal formalities for starting
sole trade in Australia. For setting up of sole partnership business in Australia, one can
choose to start the business in his own name or register for an ABN and GST if the expected
turnover is more than $75000 per year. In the words of Huebsch, (2018) a sole proprietorship
has single owner who handles all the day to day operations and keeps the profit and asset
with him or her.
Advantages
 There is no one to control the business entity therefore the person is fully independent
to take any decision.
 The owner of the business enjoy all the profit of the business expect paying the taxes.
 The privacy of the information can be kept easily as there is no one to leak the
information.
 The sole proprietor enjoys the flexibility in business as he or she alone is responsible
to make changes. The Sole Trader Can Change The Operations Of The Business As Per
Changing Requirement. For Making Changes, He Or She Does Not Require Permission From
Other.
 It is easy for the sole proprietor to change the legal structure later as per the
circumstances.