Essay on Summative Week 2 Part B

Submitted By isydney
Words: 1584
Pages: 7

Executive Summary
One of the key decisions you'll make when starting a business is which legal structure to use. Because it's such an important decision, you should get advice from a qualified independent business, financial or legal advisor.
A business name is simply a name or title under which a person, or other legal entity, trades. It not only identifies you to your customers, but also allows you to differentiate yourself from your competitors and enables your customers to make an emotional connection to your business and brand. For many businesses, the name is often the most valuable asset.
Decisions made by Business Structures and Business Name also directly impact within the financial advisory services firm which provides advisory service on various types of accounting and business compliance and management issues.

Introduction
This report will contain information related to legal requirements to setup the Business Structures also advantages and disadvantages of each business structures in Australian. The process of registering a Business Name in NSW for presentation to the client also provided to the relevant section of various legislation and common law.

Main Contents
1. Business Structures you choose will depend on the size and type of business, along with your personal circumstances and how much you want to grow the business.
Keep in mind that if you need to, you can change your business structure later on if you find that a new structure will meet your needs better.
1. Public companies

Legal Requirements
Profit/asset test
Shareholder spread
Certain constitutional and corporate governance requirements
Prospectus for the capital raising, a minimum issue price of $0.20
Advantages
There is limited liability for the shareholders
The business has separate legal entity.
These businesses can raise large capital sum as there is no limit to the number of shareholders.
Disadvantages
There are lot of legal formalities required for forming a public limited company it is costly and time consuming
The original owners may lose control
Public Limited companies are huge in size and may face management problems such as slow decision making and industrial relations problems.

2. Private companies
Legal Requirements
Deciding if a company structure is right for you
Choosing a company name
Deciding how to operate your company
Understanding your legal obligations as an officeholder
Getting the consent of those involved in your company
Registering your company, and
Understanding your legal obligations regarding your company name, Australian Company Number (ACN) and Australian Business Number (ABN).
Advantages
Your liability for the company’s debts is limited, although this protection can be destroyed by creditors, including financiers, calling for guarantees from company directors
It’s easy to transfer ownership by selling shares to another party
Shareholders (often family members) can be employed by the company
Taxation rates can be more favourable
You’ll have access to a wider capital and skills base.
Disadvantages
The company can be expensive to establish and maintain
You are required to provide annual and other returns to the Australian Securities and Investment Commission (ASIC)
Your financial affairs are public
Directors’ activities are scrutinised by ASIC
It can be costly to wind up the business.

3. Trusts
Legal Requirements
Written trust agreement
Business name registration
Registering for an ABN number with an Australian address
Advantages
Limited liability is possible if a corporate trustee is appointed
The structure provides more privacy than a company
There can be flexibility in distributions among beneficiaries
Disadvantages
The structure is complex
The Trust can be expensive to establish and maintain
Problems can be encountered when borrowing due to additional complexities of loan structures

4. Partnerships
Legal Requirements
Written agreement
Business name registration
Registering for an ABN number with an…