The Key Aspects Of Forming A Business

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QUESTION 1 Investing and proper planning is the key aspects of forming a business. Hence understanding business structures will offer an insight into the necessary management and technical skills that would be essential in order for the business to develop and prosper. The key business structures that will be explored involve partnerships and corporations. A partnership is a relation between two or more individuals who contribute their resources for the achievement of a specified outcome, commonly profit such as in Hope v Bathurst City Council (1980) 144 CLR 1 . These small businesses are characterized by mutual cooperation, responsibility and obligation . The partnership firm is governed by the Partnership act 1891 where registration of…show more content…
Ltd. [1987] A.C. 22 . Companies are regulated by the Companies Act 1956, where it must be registered in order for it to come into existence. A company is distinct from its shareholders as it is a separate legal entity, which allows for limited liability to protect its shareholders from any obligations or negligence the company itself incurs as in Adams v Cape Industries PLC; CA 2 . Insolvency of death would not affect the existence of a company, as it is itself a separate legal entity. Additionally specific business structures benefit certain individuals more than others, therefore examining the advantages and disadvantages would be beneficial in understanding what is best suited to the individual. Partnership Advantages Partnerships are informal to establish and disassemble as start-up cost are inexpensive. When considering beginning a partnership the minimum number of individuals needed is two with a maximum of twenty individuals stated by section 115 of the Corporations Act . If the partnership has the ability to increase their numbers as partners they also increase their funds and bring additional capital available for the business, as well as increase their borrowing capacity . Furthermore Partnerships allow individuals to combine their complementary skills in a collaborative management which in turn allows for a broader array of skills and knowledge that will sequentially increase contacts beneficial to the partnership.
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