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Penelope and Norman are students at Elite Education. Penelope enjoys arts and crafts in her free time, such as knitting and making soap and candles. In fact, she is so good at these things that her friends have often asked her to bring some of her soap or candles as gifts to birthday parties.
Norman also enjoys arts and crafts in his spare time. Norman is a very skilled wood worker and often makes wonderful bowls, cutting boards and statues out of wood. His friends also often ask for some of his items as birthday presents.
Penelope and Norman decide to open a business together, selling their products at various markets around Sydney on weekends. Currently, they are sole traders and their business is doing very well. Recently, they decided to create a website and sell their products online. This has been enormously successful and both are now earning over $300,000 a year as a result of increased online sales.
Penelope and Norman come to you for advice on how to structure their business. They are now growing, having recently hired employees and need a business structure that is tax effective and makes it easier to raise capital. They also want to limit their liability in case anything should ever go wrong. They have tentatively chosen the name “P&N Industries” as a name for their business, but they are unsure of this name is available.
Advise Penelope and Norman of the features, advantages and disadvantages of the various business structures available in Australia. You should also advise them, whether or not, their chosen business name is available by checking the ASIC website. Advise them of what type of company they should register, the steps that need to be taken to incorporate and registera company and the advantages and disadvantages of running the business as a company.
Stanley is a shareholder in Nelson Electronics Ltd. The company’s constitution has a clause that stated that Stanley was the accountant of the company and that he cannot be removed, unless he commits gross negligence. Stanley worked for the company as an accountant for a number of years. However, the directors recently decided to stop employing him even though they were satisfied with his work. He was not a shareholder and not a director of the company.
Advise Stanley on whether he can prevent the company from terminating his services. Your answer needs to consider relevant Australian company law. (Please do not consider employment or fair work legislation).
Would your answer have been different is Stanley was a shareholder of the company at the time he was fired?