Legal & Regulatory Regulations

Pages 8 (2008 words)
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Peggy and Nancy run a small juice bar in Brighton. Business is good and they are thinking of expanding their premises and staff and hope ultimately to branch into different parts of the country. They recognize a need to seek outside finance to assist cash flow.


However, the same perceived advantages of a partnership, if enjoyed without caution, lead to a loss of credibility both in the eyes of prospective employees and prospective financers. There are myriad advantages and disadvantages to both the business forms seen from any angle that may have a bearing upon the choice of business structures. However, one thing is certain that it is next to impossible to run a company without qualified professional help,- and associated costs,- if benefits are to be obtained and penalties to be avoided. The principal advantages of a company are of course, the vaunted limited liability, greater flexibility in tax planning, a greater social perception of credibility, and an ability to raise funds formally through the sale of equity shares.
Partnerships that maintain detailed auditing and have themselves audited by professionals are on the same footing as start-up limited companies with respect to an external loan, - for any financier, including a bank, would want personal guarantees from the directors of a new company in order to give a loan, just as they would demand collaterals from the partners of a partnership. ...
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