Business Structure

Nowadays, a large percentage of merchants tend to choose the business structure of partnership while organizing a company. Owner of a business can establish sole proprietorship enterprise, partnerships, or corporative enterprise, and each has his own positive and negative aspects, which probably has a significant impact on the business and his owner. Partnership can help owner of a business to share business better and gain more potential profits. In addition, how to establish a successful partnership relation, a hot topic, has aroused concerns of the public. In the essay, I will analyze this issue, and list my views to prove its importance.

The partnership is a group between 2 and 20 people who contribute capital and expertise to an enterprise, while in a voluntary organization it can range from 1 to as many as possible but in general charities are quite large. (2005, P110-113) Partnership agreement is generally called contract, in which some items should be clearly illustrated and indicated, like invested funds of each party, or profit and loss should be shared.

The establishment of partnership aims to gain more income and net profits. In the first few years, survival is a crucial issue, and some problems will arise. A major disadvantage of partnership is that all the parties take legal responsibilities for the personally liable for business debts and liabilities. For instance, on the final decision, not one party but both parties have to take a reasonable amount of responsibility. However, dispute in partnership is inevitable. Workload and work role are issues of great contention. And it is undeniable that partnership has great merits, partner will contribute his funds and resources to the business. Raising funds is pretty significant to accelerate the development of a business, and increase the reputation among potential clients, so that loan from bank will be easily obtained.

Partnership needs a business partnership contract. According to Adams (2010) “the case of Partnership Act 1890 is a UK act of parliament, which governments the rights and duties of people who carry on business in common with a view to profit.” (Adams, 2010, p420-423) For example, if a partner ordered machine for company, the other partners both have liable for its cost, even though it had previously been decided by majority at partners’ meeting that new suppliers were not needed. Similarly, if a partner carrying out the firm’s business while made committed a tort, the other partners also would be vicariously liable for it. Contract of cooperative relationship can ensure the better operation of a business. The contract should clearly specify that under each article of contract, each partner has to take his own responsibility. And contract can reduce or solve their business contention. Because in many circumstance, partners also have friendship with each other, but their friendship won’t affect their business. Their