Business and Legal Environment: Choosing the Right Business Structure

This report addresses the assignment brief focusing on the most suitable business structure for a new 'Economical and Healthy Food' business, owned by Obama and Osaka, who are looking to establish their business in Australia. The report recommends a partnership as the most suitable structure, detailing its advantages such as ease of establishment, access to capital, and tax benefits, while also acknowledging the liability concerns. The report further outlines the process and requirements for registering a partnership in Australia, referencing the Australian Capital Territory (ACT) Partnership Act 1963, and specifying the need for a separate Tax File Number (TFN), Australian Business Number (ABN), adherence to tax regulations, and other essential legal and financial obligations. The analysis provides comprehensive advice on business structures, making it useful for students studying business development and related fields.

Running head: MANAGEMENT
Business and Legal Environment
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Question 1: Most Suitable Business Structure for New ‘Economical and Healthy Food’ Business.
.........................................................................................................................................................2
Question 2: Process and Requirements to be followed to Register to Suitable Business Structure
for New Business.............................................................................................................................3
References:......................................................................................................................................5

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Question 1: Most Suitable Business Structure for New ‘Economical and Healthy Food’
Business.
The most suitable business structure for the new ‘Economical and Healthy Food’
business of Obama and Osaka would be Partnership. A partnership takes into account two or
more people who agrees on sharing the profit or loss of a business. There are different types of
this partnership arrangement (Galbraith, 2014). In some of the partnerships, the profits and
liabilities are shared equally by all the partners whereas there are businesses that have limited
liability. There is also something known as the silent partner where each of the party does not
remain involved in day to day business operations.
However, in the broader sense, partnership represents an endeavor jointly undertaken by
many parties. These parties mostly include the nonprofit enterprise, government, private
individuals and business (Wadham & Warren, 2013). There is also wide variation in the goals of
partnership. Nevertheless, in the narrower sense, partnership undertaken for-profit ventures have
three key categories which includes the general partnership, limited partnership and limited
liability partnership. As a new venture ‘Economical and Healthy Food’ by Obama and Osaka
can adopt a general partnership where all the parties involved would equally share the
financial and legal liabilities. In this case, the individuals remain personally responsible for debts
undertaken by the partnership. There is also equal sharing of the profits and the criteria for the
profit sharing will remain clearly mentioned in the partnership agreement. A key advantage of
partnership lies in the fact that the tax burden of the profits or the losses can be passed on to the
partners for reporting on their individualistic income-tax returns (Huxham & Vangen, 2013).

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Some of the other advantages of Partnership that would allow Obama and Osaka to look forward
to the business structure are as follows:
 In business two head are always better compared to one
 Leads to the easier establishment of the business with lower start up cost.
 Results in availability of more capital for business
 Provides a greater borrowing capacity
 Partners can be of a higher caliber thereby adding to the business
 Partnerships also allows in the savings of the resulted tax
 The business affairs of the partners are often private
 There is hardly any kind of external regulation
 Based on the circumstances it allows easier change in the legal structure
However, a key disadvantage of partnership remains in the aspect of liability where each
partner remains personally liable towards the financial obligations of business (Warner &
Sullivan, 2017).
Question 2: Process and Requirements to be followed to Register to Suitable Business
Structure for New Business
It has been found that the partnership represents a business structure that involves many
people carrying out business together. There are various laws depending on the territory and state
that governs the partnership of a business. Since the new business started by Obama and Osaka is
based in Australia so they should register for partnership through the Australian Capital Territory
(ACT) Partnership Act 1963 (Gans & Palmer, 2013) . This act mentions certain provisions that
includes nature of the partnership, relationship of the partners to the persons dealing with them,

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relationships of the partners to one another, discussion concerning the partnership and its
consequences, incorporation of the limited partnerships and miscellaneous.
The requirements for the business to get registered in this particular business structure are
as follows (Campin, Barraket & Luke, 2013):
 The business needs to have separate Tax File Number (TFN)
 The partnership must also remain applicable for the Australian Business Number (ABN)
and be used in all the business dealings
 It is necessary for both the partners in remaining liable to the debts of business
 Existence of shared management and control of the business with the partners
 It is necessary for both the partners to pay the taxes on the share of net income received
by each through partnership.
 It is vital to lodge partnership return tax with American Taxation Office (ATO) every
year
 Each of the partners should remain responsible for the arrangements of the
superannuation since they do not represent an employee of partnership.
 It is necessary to register for the GST if annual turnover is expected to be close to or over
$75,000.

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References:
Campin, S., Barraket, J., & Luke, B. (2013). Micro-business community responsibility in
Australia: Approaches, motivations and barriers. Journal of Business Ethics, 115(3), 489-
513.
Galbraith, J. R. (2014). Designing organizations: Strategy, structure, and process at the business
unit and enterprise levels. John Wiley & Sons.
Gans, J., & Palmer, A. (2013). Australian principles of evidence. Routledge-Cavendish.
Huxham, C., & Vangen, S. (2013). Managing to collaborate: The theory and practice of
collaborative advantage. Routledge.
Wadham, H., & Warren, R. (2013). Inspiring action, building understanding: how cross‐sector
partnership engages business in addressing global challenges. Business Ethics: A
European Review, 22(1), 47-63.
Warner, M., & Sullivan, R. (Eds.). (2017). Putting partnerships to work: Strategic alliances for
development between government, the private sector and civil society. Routledge.