Business Organizational Structure

Last Updated: 28 May 2020
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A partnership generally describes the type of business entities whose owners share the business profits and losses. When asked to choose between partnerships and corporations most entrepreneurs prefer partnerships for the reason that they are not exposed to dividend tax levies. This means therefore that the profits distributed between partners are mostly free of tax.  However this is not the obvious case as it will depend on the partnership structure that has been chosen by the entrepreneurs and the jurisdiction the partnership is operating in.

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For me and my friend contemplating about going into a partnership may mean that we have to look at the different partnership structures available and then pick the one that suits us best. A partnership can either occur in form of a general partnership, a limited liability partnership or a limited partnership.

General partnership.

A general partnership describes the association of two entrepreneurs or more who co-own a profit business. This form of partnership may be created by simple written or oral agreements.  In such an arrangement partners share the business liability including losses and profits. Profits are taxed as part of the personal income of every individual partner. The partnership agreement usually lasts as the long as the partners want it to last.  However there is an option of going to the Office of the Secretary of State and filing a partnership agreement at a fee that may not be less than 20 dollars.

Limited partnership

A limited partnership unlike general partnership is more closely and strictly regulated.  When a partnership is in this structure the entrepreneurs must file their agreement with the Office of the Secretary of State. Such an arrangement requires a minimum of one general partner who has the responsibility of managing the business. This general partner is personally and fully responsible for any claims that may work against the business entity.  This arrangement also accommodates entrepreneurs who play no part in the daily management of the business. The liability of these entrepreneurs to the business is directly related to the amounts of their investment (Eugene, 1908).

Limited liability partnership

A limited liability for the most part operates like the general partnership except that the co owners are not individually held liable for any claims that are made against the business entity. It is the business itself rather than the partners who are responsible for negligence or errors caused by third parties or individual partners (Tisch & Weber, 2004). As is the case of general partnerships the profits are taxed as part of an individual partner’s income.

Domestic Corporation

A domestic corporation on the other hand refers to a more complex structure of business organization. A corporation in its own right is a legal entity. These entities usually have their own privileges, liabilities and rights which are independent from the influence of the individuals that formed it. Corporations continue to exist even if in future the shareholders change. A Corporation may be sued, can sue or own property.

Additionally it is mandatory for corporations to file their tax returns (Montefior, 2008). Corporations are usually managed or run by a board of directors. In the case of a new corporation the shareholders usually have the chance select their directors whose number is determined by the existing articles of incorporation. Furthermore in the case that such an entity fails the only thing that the entrepreneurs stand to loose is their investments.

The idea of forming a domestic corporation for our chain may be a bit more complicated. The proposition therefore would be to form a partnership for our Pizza stores. Corporations experience much more conflict than partnerships as each of the shareholders compete to have the bigger say in the affairs of the corporate. The legal requirements for starting a corporation are also immense and huge amounts of funds which are not available right now will be required. Compliance costs and taxation rates are furthermore higher for corporations than partnerships.

Communication problems and their corrective measures

Both partnerships and corporations are prone to communication problems due to the fact they are managed by people who perceive issues differently. Most communication problems in such settings manifest in the form of ethical dilemmas, business secrecy and deception which can easily result to fraud, inflammatory statements, inflammatory media and hostile stereo types (Lewis, 1987). Communication problems occur in business setting and should not be left to worsen.  One of the major steps that shareholders or partners  can take to ensure that  communication problems do not occur include first and fore most  clearly drawing  up and making every shareholder aware of the division of  responsibilities(Cook, 2004).

 It is vital for each partner to understand their particular roles in the business so that they do not interfere with the duties of others and thus lead to misunderstandings.  It will also be necessary to draw up procedures that indicate how disputes and ethical dilemmas will  be sorted out This will ensure that conflicts or conflicting situations  do not mature to levels of causing animosity which is a barrier to effective communication in itself. Generally unresolved disputes have the potential of causing major disruptions in business (Goldhaber, 1986).

Additionally the members should strive to instill within themselves the habit of creating time to carefully listen to each others needs this will work to ensure no communication problems arise. Additionally attending training sessions that target to enhance effective communication in the business is necessary (Jablin & Linda, 2004).  Exposure to such training sessions will ensure that shareholders have the appropriate listening, body language, speaking, presentation, problem solving, writing, and public speaking skills which are critical in ensuring effective business communication.

In conclusion the most preferred structure for our business would be the limited partnership for the reason that it will additionally enable us to attract other investors who will come in as limited partners. With the additional resources we will be able to easily expand and even consider the idea of forming a corporation.

Reference list

Cook, T. (2004). Communicating with employees. Jackson Wells Morris White paper.      Retrieved on August 6, 2009, from      http//474.125.77.132/search?q=cache:vo30aRrwoZEJ        OYEES+AND+COMMUNICATION

Eugene A.  (1908). Cases on the law of partnership: including limited partnerships          United States: West Pub. Co, p.102

Goldhaber, G. (1986). Organizational communication. Iowa: Wm.C. Brown, p.4.

Jablin, F. & Linda L. (2004). The New Handbook of           Organizational Communication:       Advances in Theory, Research, and Methods. Thousands Oak: Sage, p 512-513.

Lewis, P.  (1987).Organizational communication: the essence of effective management.   New York: Wiley, p.15-16.

Marshak, R. (2009). Reflections on wicked problems in organizations. Journal of  management Inquiry, 18(1), p. 58-59.

Montefior, H. (2008).The Taxation of Corporations in New York. Charleston:      BiblioBazaar, p.1-5

Tisch, J.  & Weber, K. (2004). The power of we: succeeding through partnerships. New  York: John Wiley and Sons, p.163

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Business Organizational Structure. (2018, Jan 12). Retrieved from

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