Company Structure a Pivotal Decision Term Paper

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The partners are directly responsible financially for the obligations of the business. Therefore, in case of loss or debts, the owners suffer the risks and losses since they have liability for the business. In terms of complexity and flexibility, the partnerships remain appropriate for the partners. The issue of raising finance is shared between the partners; however, they cannot get loans for the business independently. Therefore, they are not suitable for the two partners who wish to set their business.

The third venture is a corporation, which is a separate entity from the persons that establish the business. Therefore, in financial terms, they are easy to raise capital as members contribute, and can borrow finance independently. Like the limited liability partnership, they are legally bound and hence the liability is limited. They eliminate the issue of personal liability. The tax returns are similar to those of partnerships and are taxed independently. However, it is not suitable for the two professionals since the corporations are quite complex to establish. Additionally, the corporations are not flexible to run. They require extensive record-keeping (Aquinas, 2010 p. 153). Corporations are thus, not the appropriate choice for John and Fred to establish their business.

The last business structure that I also do not propose for John and Fred to establish is that of a limited liability company. An individual or more partners and shareholders can establish the company. They have the positive features of corporations and partnerships (Grandori 2006, p 132). The taxation is not passed to the profits, and the liability is limited. The issue of finance is also easily tackled, as the company is independent. However, the aspect of complexity and flexibility limits John and Fred form using this structure.

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The company is complex to establish and equally not flexible. Thus, it is not suitable for the venture that the two are planning to establish.

Conclusion

The limited liability partnerships have numerous advantages as compared to the other forms of business structure. They are a crossbreed of the general partnerships and the company structure. Therefore, they encompass and engage the positive aspects of the two structures of business organization. They have also been credited for attracting the professional service firms, such as accountants, lawyers, surveyors among others. It is not surprise that John and Fred are a lawyer and an accountant respectively. The partners benefit from the simplicity of establishing and running the business, and benefit from the limited liability, which protects their personal assets. They also save on tax obligations. Limited Liability Partnerships are, therefore, the most suitable for John and Fred to establish their framing business.

Reference

Graubner, M. (2006). Task, firm size, and organizational structure in management consulting an empirical analysis from a contingency perspective. Wiesbaden, Deutscher UniversitSts-Verlag. http://site.ebrary.com/id/10231907.

Spadaccini, M. (2007). Business structures. Irvine, CA, Entrepreneur Press.

Douglas, a. (2009). Partnership working. Milton Park, Abingdon, Oxon, by Routledge. http://site.ebrary.com/id/10258056.

Grandori, a. (2006). Corporate governance and firm organization microfoundations and structural forms. Oxford, Oxford University Press.

Aquinas, P.G. (2010). Organization structure and design: applications and challenges. New Delhi, Excel Books.

Radan, P., Gooley, J., & Vickovich, I. (2009). Principles of Australian contract law: cases and materials. Chatswood, N.S.W., LexisNexis Butterworth

Clarkson, K.W., Miller, R.L., Cross, F.B., & Clarkson, K.W. (2012). Business law: text and cases: legal, ethical, global, and corporate environment. Mason, OH, South-Western Cengage Learning.

Balotti, R.F., & Finkelstein,….....

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