COMPANY LAW 402 ASSIGNMENT Example | Topics and Well Written Essays - 2500 words

COMPANY LAW 402 - Assignment Example We instituted legal research into this matter with a view of determining the suitability and legality of starting a Picture Framing business in Australia. We believe this goes towards the very crux of your matter. Further, we would like to state that our services can only be of a legal nature on this matter. It is your duty to seek out qualified professionals who will assess the proposed business venture while looking at its location and profitability in order to determine whether it will be a going concern. Due Diligence It would be remise of our duty as consultants if we did not advice you that it is your duty look into the financial and commercial aspects of this business venture. This is because a business wherever it is instituted needs to have a strong financial basis that will see its survival and development. This should be done so as to avoid a situation where you have overlooked the financial aspects of this venture. That would be catastrophic. You should undertake this res earch through professional help. Ownership Before starting on any business, you need to determine whether or not the company structure is right for the particular company, decide what name the company is to assume, its mode of operation, the legal obligations that are assumed by the company, getting the requisite consents and finally registering the company (Commission). As discussed with you a summary of the proposed corporate structure has been prepared. It should be reviewed carefully and approved by your accountant. Australian Law provides for the structuring of any business in four ways. 1. Sole trader: an individual trading on their own 2. Partnership: an association of people or entities carrying on a business together, but not as a company 3. Trust: an entity that holds property or income for the benefit of others 4. Company: a legal entity separate from its shareholders. Sole Trader Looking at the business of a sole trader, one realizes that the same is entered into by one owner. This owner gets the benefit of directly transacting with his clientele thereby creating a trust as between the business and the clientele. The tax obligations related to this business are subject to the personal rates of the business (Government). The only major disadvantage of this enterprise is that the owner is personally liable for the business liabilities of the company. This opens up the owner to lawsuits that are consequent from the company as the company is not a separate legal entity. A sole trader cannot also share the burden of management and costs with any other person (Lawyers). In relation to the Picture Framing business, you both want to be co-owners of the enterprise. This in effect renders this business structure nugatory as far as your proposed enterprise is concerned. Trust The other business enterprise that is provided for in Australia is in the nature of a Trust. A Trust is defined to be a business where the trustee conducts business for the benefit of ce rtain beneficiaries. This in effect means that at all times the trustee can only conduct business that is in the interest of the beneficiaries. The advantages of Trusts are that it minimizes the tax that is levied on the business as the income from the business can be directed at the beneficiary with the lowest income thereby