Partnership

Question 1

sole trade

Answer 1

a business started and managed by only one person. that person doesn’t register the business as a separate legal entity.

• no legal requirements to form the business. quick and low cost
• the owner is the legal entity and enters contracts into his name, therefore, carries all the risks
• the business has no continuity of existence.
• the owner has unlimited liability
• the owner can make a quick decision that will fasten the production
• bouncing off ideas and discussions will not occur as there is only one manager
• if the capital requirements arent a lot for the owner than that’s okay, but if the own cant afford capital he will have to consider another form of ownership

Question 2

Partnership

Answer 2

a business where two or more people become joint owners

• no legal requirements, quick and low cost. a partnership is entered in writing. if there’s no partnership agreement in writing that may complicate issues
• the owners are the legal entities therefore they enter contracts into their own names and carry all the risks.
• the business has no continuity of existence
• partners have unlimited liability, they are also jointly and severally liable for the debt of the business
• it is possible to raise more capital through partnership because there are more people who can contribute
• more people are consulted when a decision is made. slow decision-making
• division of labor, more people to give input

Question 3

Companies

Answer 3

formation procedure :
the person who wants to register the company has to :
-pay the required fee
-complete a notice of incorporation
-and register a memorandum of incorporation
an MOI is a founding document to start a company. it also describes the duties and responsibilities and liabilities of directors.

• minimum number of shareholders in both companies is one
• public company has to have three directors while a private company has one.

Prospectus :
a written invitation to the public to buy shares or other securities in the company. public companies only tho
-meetings. public companies must give a 15-day notice of an upcoming meeting. while private companies have to give a 10 business days notice
-private companies Pty Ltd
-public companies Ltd
-personal liability company Inc
-state-owned company SOC

formation procedure - a little complicated and involved
business is a legal entity
the business has a continuity of existence
owners have limited liability