TO: MARK, INGRID AND SHIMON

REPORT OVERVIEW
As the business advisor for the partnership of Mark, Ingrid and Shimon, I have researched and analyzed the state at which your business is currently in. As Shimon has decided that it would be a better idea for the business to move from a partnership to a company structure I have expressed the advantages and disadvantages of the suggested merge as follows PARTNERSHIP STRUCTURE At the moment your business is currently a partnership. A partnership is a legal business structure that is owned and operated by between ! and !" people with the aim of making a profit. A partnership is unincorporated where the business entity and the owner are one and the same when the owner dies than so does the business. #elow are the main advantages and disadvantages of remaining with a partnership structure Advantages: $ess costly to operate than a company Shred responsibility and workload %ool funds and talent Minimal government regulation &o taxes on business profits, only on personal income If an accident was to occur to one of the partners, the business would have to close. Disadvantages: %ersonal unlimited liability $iable for all debts, including partners debts %ossibility for disputes 'ivided loyalty and authority COMPANY STRUCTURE (here are different sorts of company structures, the two main are %ropriety and %ublic. In your case the %ropriety structure would be most suitable. A %ropriety company is a private company. As such that it has the words %ty $td after its name, indicating that it is private and that shareholders have

limited liability. (hese companies are limited to having ! to )" shareholders and shares cannot be sold to the general public through stock exchange. *ompanies differ from partnerships as companies are incorporated. Incorporation refers to the process companies go through in order to become a separate legal entity from the owners. #elow are the main advantages and disadvantages of changing to become a company Advantages: (he business is more likely to grow, therefore enhancing profits (he owner+s have limited liability *ompanies raise most of the capital they need through e,uity finance, and to a lesser extent, through debt finance If one of the owners decides that they want less responsibility, the function of management is separate to the ownership Incorporation allows the company to have an infinite lifespan Disadvantages: Increased tax -." cents in the dollar/ May become to large, resulting in inefficiencies 0ave to present many documents about your business. %ay a re,uired fee to the Australian Securities and Investments *ommission -ASI*/

RECCOMENDATIONS
1rom gathering results from your business my conclusions are that the best structure for your business would be to change to a %ty $td *ompany. 2hy I chose this is that if you were looking to expand your business, as Shimon wants to do, your partnership structure might not be able to cope, but a company structure would be able to keep up with the demands that you are now currently receiving. Also, a company will not fold if one of the partners wants out of the business at a later date. Seen as though you have already established a strong foundation for a business and a strong partnership, I believe that for your business to grow it must change from partnership to %ty $td *ompany.

#3$I&'A 20I(3