QUESTION 1 Investing and proper planning is the key aspects of forming a business. Hence understanding business structures will offer an insight into the necessary management and technical skills that would be essential in order for the business to develop and prosper. The key business structures that will be explored involve partnerships and corporations. A partnership is a relation between two or more individuals who contribute their resources for the achievement of a specified outcome, commonly profit such as in Hope v Bathurst City Council (1980) 144 CLR 1 . These small businesses are characterized by mutual cooperation, responsibility and obligation . The partnership firm is governed by the Partnership act 1891 where registration of …show more content…
Ltd. [1987] A.C. 22 . Companies are regulated by the Companies Act 1956, where it must be registered in order for it to come into existence. A company is distinct from its shareholders as it is a separate legal entity, which allows for limited liability to protect its shareholders from any obligations or negligence the company itself incurs as in Adams v Cape Industries PLC; CA 2 . Insolvency of death would not affect the existence of a company, as it is itself a separate legal entity. Additionally specific business structures benefit certain individuals more than others, therefore examining the advantages and disadvantages would be beneficial in understanding what is best suited to the individual. Partnership Advantages Partnerships are informal to establish and disassemble as start-up cost are inexpensive. When considering beginning a partnership the minimum number of individuals needed is two with a maximum of twenty individuals stated by section 115 of the Corporations Act . If the partnership has the ability to increase their numbers as partners they also increase their funds and bring additional capital available for the business, as well as increase their borrowing capacity . Furthermore Partnerships allow individuals to combine their complementary skills in a collaborative management which in turn allows for a broader array of skills and knowledge that will sequentially increase contacts beneficial to the partnership.
The benefits of Partnership Company are that business is anything but difficult to build up and start-up expenses are low. There is more capital accessible for the business. Workers that are of high-bore are made accomplices. The burdens are that the obligation of the accomplices for the obligations of the business is boundless . There is additionally danger of differences and contact among accomplices and administration. Every accomplice is an agent of the partnership and is at risk for activities by different accomplices. This means that it brothers choose this type, they will be responsible for each other’s action irrespective of the fact whether they like it or
Having the appropriate structure is vital for an organisation or business to meet its aims and objectives. A business may be structured by:
When it comes to partnerships Alex, Bill, Carl, and Devon will have two options- a general partnership or a limited partnership. Partnerships are beginning to be a business form of the past. Once upon a time, partnerships were “the default form of business and provided the benefit of pass-through taxation, but lacked the important feature of limited liability” (Chrisman, 2010, p. 465). In a general partnership, each partner associated with the entity will be held liable for their own business decisions as well as
When firms enter new markets or businesses, the way they structure these new businesses can result in greater complexity and less transparency. For instance, a firm that keeps each business separate will be easier to value than one that squeezes all the businesses into a single entity.
The relationship between an organization’s strategy and structure are extremely important because it “directly impacts a firm’s performance” (Rothaermel, 2013, p. 309). Also, as an organization grows, it should reevaluate the current strategy and structure to ensure that it remains the optimal choice for the organization (Rothaermel, 2013). The four types of organizational structures, listed in order of least to most complex according to Rothaermel (2013), are: (1) simple, (2)
A partnership is an arrangement between two or more groups, organizations or individuals who work together to achieve common aims or who have common interests.
A partnership is the creation of two or more people who operate a business as co-owners and share profits. There is a collective amount of money that is contributed to the organization as it pertains to all aspect of the business and in return each individual share equally the profits and losses of the business. Partnerships require that there be a partnership agreement established because more than one person can make decisions for the partnership. The agreement should include how future business decisions will be made, the profits will be split among the partners, and the dissolving of the partnership (sba.gov). The partnership must file an annual information return that reports income, deductions, gains, and losses that occur from normal business operations. The business does not pay income taxes but the business pass through any profits and losses to its partners. Taxes that are included in a partnership are: employment tax, excise tax, annual return of income, income tax, self-employment tax, and estimated tax. Other qualifications of a partnership is that partners must furnish a copy of their Schedule K-1 form to all the partners by the date of the Form. It is important to remember that partners are not employees and they are not to be issued a W-2 Form.
The below table compares and contrasts business structures on the basis of the most common issues, naming: taxation, liability, risk and control, continuity of existence, transferability and expense and formality (Quickmba, n.d.). Also, you will notice that in the table the similarities are extended from one structure to the other, while differences are kept in separate cells.
There are four main forms of business structures. The structures of business differentiate based on liability, tax implications, and what type of business is being evaluated when determining what structure to use. This paper will cover the advantages and disadvantages within the four types of business structures; Limited Liability Corporations, Corporations, Partnerships, and Sole Proprietorships.
Before starting a new business, several decisions such as its legal structure must be made first. Five basic entity types exist in which to structure a business. These types consist of sole proprietorships, partnerships, limited liability companies (LLC), C corporations, and S corporations. When determining the type of structure to use, comparison of different factors such as liability to the owners, taxation, and management
In order for one to evaluate and identify with the diverse business structures, he/she must be aware of the meaning and standards that makes that structure. Various businesses functions in different ways as the world is full of technology and new structures, company cultures and new ways in which companies are run. In order to fully grasp the concepts of Organizational structure and culture in the movies, I will use the Movie Up in the Air and The Devil Wear Prada movies to analyze a business scenario from them.
A partnership is a business organization where the partners own the business together and are
Firstly, even though there are different types of partnership such as general, limited and limited liability partnership. This three different type has its advantages and disadvantages however we will be mainly focused on general partnership. One advantage of the general partnership is raising capital due to the nature of the business the partners will raise capital to start-up the business. Therefore more partners mean more capital can be put to the business, this allows the business to have more potential for growth and profitability. Another advantage is that a partnership is less complicated to form and run than a company they don’t have legal filing requirements, this means they don’t have to file accounts and documents with Companies House.
is important that you choose the right structure for your business as the type of
Businesses are affected by with structure they operate within and success can vary based on their choice. Structures gives important information that a firm needs to operate because it can be a foundation, or reference to see exactly what areas need improvement. A firm must be wise in their choice of all the different markets before they make their entry. Education of this would lead to best overall choice and possibly the success of the business. Firms sometimes make poor decision because they are not always sure of with market fits their structure and this could lead to failure.