SETTING UP A BUSINESS (Business and Management Fda) Essay

SETTING UP A BUSINESS (Business and Management Fda) - Essay Example h a decision, the business owner should consider his or her vision regarding the nature and size of the business, the level of control, the business’s susceptibility to lawsuits and the tax liabilities of each of the structures (Cross et al., 2009, p. 353). In our case, Clare, Jasmine and Sanjita can either decide to form a general partnership, a limited partnership or a corporation. A partnership is a business set-up that is established when two or more people bring their skills and resources together with one goal (Bagley & Dauchy, 2012, p. 287). Notably, a partnership is defined by the Partnership Act as â€Å"a voluntary association of two or more people, each contributing money, skills, labor, property or goodwill as the capital of the new firm† (UK Gov, 1980). A general partnership is a form of partnership where the partners are all fully active each with control within the business. This also makes each one of them fully liable for business debts (Emerson, 2009, p. 267). In reference to Gibson and Fraser (2013, p. 290-94), entrepreneurs would consider a general partnership because each partner has equal authority within the business. This makes each partner partake in decision making within the business. This also implies that every partner acts as an agent to the business and to the other partners. In this case, a partner can transact on behalf of the business and the other associates, thing that would legally bind them (Miller, 2012, p. 387). However, a partner is not authorized to indulge in a business that would have harmful effects to the other partners such as selling the business property without consent of the other associates, sell his or her interest in the organization or admit new partners into the business without the consent of the other associates (Law Commission UK, 2003, s.28 and 29). Another factor that would make entrepreneurs choose a general partnership is the way profits and losses are shared. Unlike other forms of business such as