Compose a 2000 words essay on Business law. Needs to be plagiarism free!Download file to see previous pages... Operating an incorporated private company has numerous advantages and disadvantages. The

Compose a 2000 words essay on Business law. Needs to be plagiarism free!

Operating an incorporated private company has numerous advantages and disadvantages. The main advantage of operating a private company by Abi, Emily and Ella will be limited liability. According to Miller and Jentz (2008), this implies that their personal assets will be safeguarded against lawsuits or claims by creditors. This is unlike a sole proprietorship or a general partnership where the partners or owner are jointly or personally liable to all the claims such as loans, legal judgments or accounts payable by creditors and lawsuits. This implies that in a private company, Abi, Emily and Ella’s liability will be restricted to the amount they have advanced in the company (Scheeman, 2013). Their assets will be safe and since they cannot be held responsible for the debts incurred by the company except when they give a personal guarantee. Conversely, an incorporated private company has an independent corporate existence (Miller &amp. Jentz, 2008). When Abi, Emily and Ella register their business as a private company, it will be independent and different from them. It will have become a separate legal entity that can own assets, acquire liabilities and sue or be sued. If Abi, Emily and Ella were to form a private company, they would benefit from a tax deferral potential. ...

Anyone can be a shareholder in Abi, Emily and Ella’s company. Therefore, they can give their family members the opportunity to be shareholders, which gives them the chance to reallocate income from family members in high tax group to family members in a low tax group who are taxed at a low rate (Gillies, 2004). If Abi, Emily and Ella were to form a private company, they would be in a position to receive income and authentic taxes benefit (Emerson, 2009). Rather than receiving earnings when they are earned by the business entity, being in an incorporated private company will allow them to receive their earnings at a period when they will pay less in tax. Incorporated companies have an unlimited life span. Unlike partnerships and sole proprietorships, incorporated private companies keep on existing even when the owners or shareholders leave business or die or when the business ownership changes (Pride et al, 2012). Though there are numerous advantages that Abi, Emily and Ella would enjoy forming a private company, there are numerous disadvantages that would accrue to them. Though an incorporated private company is regarded as a separate entity that is different from its owners, authorities require to look at the character of the people behind it. For instance, in Daimler Co Ltd. v Continental Tyre and Rubber Co, it was determined that a company can be assumed to be an enemy of the state if the owner or the shareholder in control is an inhabitant from an enemy state (Miller &amp. Jentz, 2008). In addition, an incorporated company can be stripped off its separate entity if the main purpose of its formation is to evade taxes. This is evident in Commisioner of Income Tax v.