商法第三次考试

1, In case one, Mary wants to set up her own business as a personal trainer. But due to the downward economy and the impact of customer base, she is looking forward to change her business organization. Sole trader is a one person business is which the person managers and owns the business. Being a sole trader there are some advantages and disadvantages.

Advantages: ①, This type of business is quick and easy to set up—no registration is needed. Under UK including the Scottish law, it is the simplest form of business organization and only basic legal requirements needed to comply with tax return laws.

②, The owner can run the business as he/she wishes. The sole traders only require start-up capital to commence business and are not dependent upon the investment of capital by others.

③, The owner may quickly and easily adapt to changes in market supply or demand and when business is not operating as envisaged the owner can close down easily if there is no debts. The owner of sole trader business can decide the way in which the business is to be conducted and has the flexibility to restructure or dissolve the business whenever it suits. The law does not recognize the sole trader as being separate from the owner and so the business will cease on the death of the owner.

④, Accounts are fairly straightforward. Although the sole traders must produce accounting information to satisfy the taxation authorities, there is no legal requirement to produce accounting information relating to the business for other user groups.

Disadvantages: ①, Basic legal requirements to comply with the disclosure requirements of the Business Names Act 1985.

②, Sole trader has unlimited liability for all debts or obligations owed by the business. The owner must undertake most of the work and has sole responsibility for the business. He or she unlimited liability for the debts of the business. This means that the owner is liable for all of the debts of the business and there fore must pay all the bills.

③, Sole trader may struggle to raise finance as they cannot offer shares to other parties in order to do so. Most of time, sole traders often find it difficult to raise finance to fund their business.

④, When sole traders choose the names of their business, there are also some statutory control. Previously found in the Business Names Act 1985. These controls are now to be found in the Company and Business Names Regulations 2009 and the Company, Limited Liability Partnership and Business names Regulations 2009.

2, In case two, Mary decided to enter into a partnership with Samantha as personal trainers. A partnership is commonly formed where two or more people wish to come to together to form a business. They will normally invest money, share the workload and share responsibility for running the business.

Advantages: 1, Sometimes a sole trader will bring others into the business in order to move to a partnership. Perhaps they have common business idea that they wish to put to the test or have realized that their skills and talents compliment each others in such a way that they might make a good business team.

2, Due to the nature of the business, the partner will fund the business with start up capital. This means that the more partners there are, the more money they can put into the business, which will allow better flexibility and more potential for growth.

3, Partners can share the responsibility of the running of the business. They can splitting the management and taking an equal share of each business task, they might well split the work according to their skills.

4, Partnership only levy one tax which is Individual income tax, but the quoted company have to levy Individual income tax and Corporate income tax.

Disadvantages: 1, The law of partnership evolve during the course of the eighteen and nineteenth centuries and the principle of law developed by the court were finally codified in the Partnership Act of 1980. This states that a partnership is a legal person separate from the partners. This means that the partnership can be sued or can sue.

2, Partners are agents for the partnership and thus an individual partner can bind the partnership to a contact. A partnership firm is not a body corporate and so does not have a separate legal personality: it is only description of the relationship between the partners. The property of the firm belongs to the partners and the firm’s debts are the debts of the partners. Creditors of a partnership will firstly go to the partnership for payment. If, however, the partnership cannot pay these debts, then the individual partners will become personally liable for the partnership debts. 3, People are likely to have different ideas on how the business should be run , who should be doing what and what the best interests of the business are. This can lead to disagreements and disputes which might not only harm the business, but also the relationship of those involved.

4, Compare with the quoted company, the amount of money is less than quoted company.

3, In case three, a friend suggested Mary to set up a limited company as a safer business model for her. Registered companies originated with the Joint Stock Companies Act of 1844. The term “registered company” now means a company incorporated pursuant to the registration requirements laid means a company incorporated pursuant to the registration requirements laid down in the Companies Act 2006, the principal Act. Advantages:1, The owners, who now hold a share in the company, have limited responsibility for the debts of the business. Unlike the sole trader or most partnerships. They only stand to lose the amount they have invested in the business to date. Section one of the Companies Act 2006 does allow a company to be registered without limited liability. However, an unlimited company must be privately owned. These are very uncommon and the cast majority of companies enjoy limited liability. 2,Many investors wish to make a profit but do not wish to be directly involved in the day-to-day running of the business. Perhaps they are just too busy or lack the necessary expertise. Investing in a company allows members of the public to hold shares whilst leaving the business operations to the Company Board of Directors.

3, In a company, particularly public companies, ownership and control are separated. However, in private companies owners very often manage day to day work.

4, The legal doctrine of incorporation means that a company is a legal person. The existence of a company as a separate legal being means that the following advantages exist: a. changes in the ownership of the company do not affect the running, this is known as “perpetual secession”;

b. the company can own assets and property in its own right;

c. the company has limited liability;

d. the company has the ability to sign contracts, sue and be sued; e, the company has its own Board of Management, separate from ownership.

Disadvantages: 1, The term “company”is restricted only to those businesses which have formally registered with the government.

2, The owners must supply a large amount of information. These businesses must then adhere to the regulations of the Companies Act 2006.

3, Bureaucracy and regulation: Bureaucracy is common in Limited company. This situation will damage the fair and harm social stability. Besides, limited company need to register or disclose information other than for taxation or business regulation.

4, Government fees and taxation: Partnership only levy one tax which is Individual income tax, but the quoted company have to levy Individual income tax and Corporate income tax.

4, ① Sole trader: This type of business is quick and easy to set up—no registration is needed.

② Partnership: This type of business needs partnership agreement.

③Registered/Limited company: This type of business needs 5 step process.(1) Documents are drawn up on company’s behalf.(2) Documents are submitted to the Registrar with appropriate fee.(3) Registrar checks documents to ensure Companies Act provisions have been complied with.

(4) Registrar issues the certificate of incorporation. On the registration of

a company the Registrar issues a certificate that the company is incorporated. (5) The company commences business.