Choosing A Suitable Business Structure

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Choosing a suitable business structure For Coral Jones and James Tran (C & J) who are thinking of starting up a new business, the ability to raise and solicit funds and operate in an efficient and manageable fashion is determined by the form of entity with which they choose to organise their intangible property. The four main business structures used by businesses in Australia are sole proprietorship, partnership, company and trust, Based on Coral and James’ current scenario, I would assume they are planning to open their own designing firm which offers architecture, interior and industrial design services. A sole proprietorship would be unsuitable for this case since it involves an individual going into business for themselves. As a…show more content…
Ultimately, a partnership would allow Coral to continue her work in the medium sized firm whilst establishing this new business, thus providing her with financial security in times of need. Another advantage of the partnership entity is that it provides greater access to finance and management from the resources of both partners. As Section 24 of the Partnership Act states amongst its rules of the interests and duties of partners, “All partners are entitled to share equally in the capital and profits, and must contribute equally towards the losses”. Furthermore, the Act states that “Every partner may take part in the management of the partnership business”. Unlike in a sole proprietorship where capital remains limited, partners in a partnership are able to contribute their share in the business to increase capital volume and ultimately business activities. Therefore, the ability to pool resources from partners will, in particular, assist James who just graduated from university and may lack the sufficient funds needed to contribute towards a start-up business. A partnership is also considered a safe organisation for providing credit facilities due to the unlimited liability of partners. Sufficient funds in terms of credit can be procured from financial institutions
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