Advantages Of Using Proprietary Rights

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Running their businesses alone we assume that the relative entities are a business or sole proprietorship. By acting separately, both Sarah and Jane receive all profits separately; they are both free to make their own decisions concerning the running of their businesses and only pay personal income taxes on profits. The main disadvantage of this is that the owner alone is responsible for all liabilities brought on by the business for which creditors can liquidate personal assets. In other words anything in the name of the business owner can be held as capital on losses incurred. Other disadvantages include the limited ability for the owner to secure financing and capital (limited to personal funds and loans) necessary for growth and…show more content…
More specifically Rumpole was before only Sarah’s accountant, but now acts on the behalf of the combined parties. Efficiency / Piercing the corporate veil: The intent of a creation of a company collectively combining two businesses together is to pool together processes to create strategic advantage over competitors. In some instances this can find an owner or director sell their share or resign from their company and go on to use the gained information (which they wouldn’t have learnt without the formation of the company) usually in competition with original company. (ii) As Sarah Jane Pty Ltd. A proprietary limited company is a legal entity that is separate from its shareholders. Advantages: Limited liability for the company debts, although owners are not totally protected if the company fails it is easier for small businesses to take steps to increase their profitability through securing capital and making investments. Taxation rates often have more favourable values which help to decrease running costs and repayments. Disadvantages: The main disadvantages for Pty Ltd companies are the operating costs. Having to increase investment to increase sales and maintain profitability is difficult. With that annual accounting and financial statements are also required by law to be available to ASIC, with that they make public the business affairs whether positive or not and directors have to
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