Business Planning and Structures Essay

5897 Words 24 Pages
Business Planning and Structures

The main structures that shall be examined in the context of this venture are: partnerships, joint ventures, companies, trusts and sole partnerships. For the purposes of the investments under consideration, there could be a number of structures that might be applicable for each but not all will be necessarily as efficient. The most probable structure that might be utilised to facilitate each investment is as follows - implement the retail business as a sole trader, farm as a partnership or joint venture, joint venture or company for the speculative mining venture and set up a trust or company for the long term investment portfolio. The rationale will be elucidated below.

A Retail Business
…show more content…
A Farm

If the family is considering primary production as an investment, the optimal structure for operation would probably be a partnership although a joint venture may also be used. The advantages of operating as a partnership are that there are no partnership taxes to be paid, only individual income tax, the ability to borrow more capital than a sole trader and the fact that partnerships are informal and inexpensive to establish. On the downside, there is, similarly to a sole trader, unlimited liability for the partners and each partner is responsible for every other partner's liability, should the business investment fail. There is also the same issue of the partnership being dissolved upon the death of either of the parents assuming they are both partners. As mentioned above, each of the partners is an agent for another, a situation which could be financially perilous given that the children may not have sufficient business acumen to conduct a farm and any failure will be felt by all the partners. One option, given these circumstances a limited liability partnership could be a viable alternative since these require a minimum of one general partner and one silent, thus the mother and father could be general partners and the children silent partners. Consequently, they will have no role in the conduct
Open Document