George and Sam wanted to form a new business of bakery shop. The breads which they were finding were not available in the market. George has experience of bakery as he used to work for Breads R Us. He has a home of $500,000 value. Sam is an accountant and he is an owner of a care and Apple Mic Computer. There business assets price is $20,000. The landlord is ready to enter the lease with George and Sam for 3 years at $20,000 pa.
Issues and question arise that what can be the business structure for the formation of their new business. Legal advice can be given that George and Sam can for contract in a partnership of the business. Another way through which they can form the business is to incorporate the company.
If they do the partnership for the business, then they have to sign a written contract paper where terms and conditions are present. All the rules of the contract are needed to be maintained because breach of the contract is not allowed. The guilty party has to give punitive damage to the innocent party. For the Partnership business Structure number of people is involved in the business. Sole trader structure can be chosen for such business. There are two types of business limited ad general partnership. According to Partnership Act 1997 Australian Business Number (ABN) and Tax File Number (TFN) is needed to be followed with the sole trader entity. Super annotation is the responsibility of each partner in the business.
There are some advantages and disadvantages of Partnership Business:
Another way of structure formation of business is incorporating a business. For incorporating a business it is necessary that contact should be done by the secretary of state. Articles are needed t be incorporated by acquiring documentation. Incorporate fees is needed to be paid. Internal Revenue service is needed to be collected with registration event. Online registration is needed to be done with Companies Intellectual property Commission (CIPC). There are 10 steps for this business structure.
The business can be launched by venturing the company with the shield of professional aspect. The structure to incorporate a company falls under Australian Securities and Investment Commission (ASIC) which compiles the rules of Corporation Act 2001. For conducting the beneficial obligations with enforced obligations ASIC rules are needed to be applied. If any company is incorporated certain rules are applied which helps in formation of business in an authentic way. There are certain plans of ASIC business which is needed to be followed with the structural balance which helps in carrying forward the structure of the organization.
As Sam and George are trying to formulate the structure of a business for their baker business so incorporate business is suggested to them. While forming the incorporated business certain rules and regulations are needed to be followed.
There are some advantages and disadvantages of incorporated business structure:
Conclusion
There are lots of advantages of incorporate of company which is easier to be accessed than partnership act, so legally it is advised to George and Sam that for establishing a business of bakery the rules of incorporating business structure is perfect. Sam and George can rise up the capital if this structure of business is followed by them. In this case it has been described that George has much more cash than Sam which is inherited by him. Even both of them can evaporate the company and in that case their personal assets will be not in a risk. As George owned house of $500,000 and Sam has owned the car of $80,000, so if they run business structure by incorporating the company then their assets and investment will not fail in the business. By the help of incorporation of the company they will be allowed to use the resources in the beginning of their business. Even the company can form the contract by the own name. So George and Sam entered the contract with the landlord with the name of the company and they used the incorporated structure of the business formation.
Abbott, Keith, N Pendlebury and Kevin Wardman, Business Law (Cengage Learning, 1st ed, 2013)
Allison, John Robert and Robert A Prentice, Business Law (University Co-Op, 1st ed, 2009)
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Gevurtz, Franklin A, Corporation Law (West, 1st ed, 2010)
Jozsa, Frank P, Big Sports, Big Business (Praeger, 1st ed, 2006)
Larrabee, F. Stephen, Troubled Partnership (RAND, 1st ed, 2010)
Litka, Michael P and Marianne Jennings, Business Law (Wiley, 1st ed, 2000)
Mancuso, Anthony, Incorporate Your Business (Nolo, 1st ed, 2011)
The Companies Act Of 1961 (S.G. Reid, govt. printer, 1st ed, 2009)
Australian Securities and Investments Commission Act 2001 (2017) Austlii.edu.au <https://www.austlii.edu.au/au/legis/cth/consol_act/asaica2001529/>
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