Essay on Business Structure Of A Business

1485 Words Aug 14th, 2016 6 Pages
This report will give important insight to the three friends, Susan, Sonil, and Shao, that are wanting to start a cafe business. Areas that this report will explore are which business structure they should trade under, what assets, income, and expenses they should expect, and what financial information and statements that will be essential for them when running the business. The information that I have provided will be supported by other findings such as textbook resources and web pages.


The three business structures, sole trader, partnerships, and companies, will be discussed below to justify which is the best business structure for Susan, Sonil and Shao to trade under.

A sole trader is for businesses that have only one owner, so it will not be a valid option for them.

Partnerships are for businesses that have two or more owners so it is a possible business structure that they can consider. However, Susan, Sonil and Shao should be aware that in a partnership, there is no separate legal entity, according to Atrill, McLaney and Weil (2013). This means that it is the partners and not the business who enters any contractual arrangements such as borrowing, selling, and employing. Each partner will hold equal responsibility for the actions made by the any of the partners. Because there is no distinct separation between the partners and the business, liability is unlimited which means that the personal assets of the…

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