Coml204 Notes
Coml 204
3 broad structures
Trade on your own (sole trader)
Partnership (there are at least 2 people involved
Limited liability company (many parties involved and have equal rights of management
What are some of the basic issues that you will be concerned when setting up on enterprise?
Step 1: need to decide the business structure
Step 2: Finance, decide how to finance the business
Company (demand securities, mortgage)
Sole trader (individual)
Partnership (all the partners involved)
Limited liability company (can issue shares- allow outsiders to contribute to the business with limited liability, acquire debt in the same way of partnership and sole trader)
*In NZ, can have a person company (get disadvantage because bank may not lend money to that company as bank may treat tat company (small company) in the same way of treating sole trader and partnership.
Must personally guarantee the debt repayment, main reason (because you will be individually and collectively fully liable for the debts, creditors can attack all the personal assets.
Step 3: Risk
Sole trader- fully responsible for the debt, bankruptcy faced by sole trader can be deemed as personal bankruptcy.
Partnership- fully liable for all the debts (all partners), everything partners own is reliable to pay for the debts.
*More dangerous then sole trader
- Not only liable for your own shares, fully liable for all the debts of the partners
-you are liable for all the debts whether or not you are at fault
-creditors can choose to claim payments from anyone of the partners or all partners
* Another condition: Limited partnership (started year 2008)
Not the same as silent partner
Need a general partner
Limited partner do not have the right to manage the business, cannot involve in decision making, can only involve in investment decision making
Limited liability company- minimise your risk if investing in this company, lose the value of shares, creditors cannot attack you on the payments
3 broad structures
Trade on your own (sole trader)
Partnership (there are at least 2 people involved
Limited liability company (many parties involved and have equal rights of management
What are some of the basic issues that you will be concerned when setting up on enterprise?
Step 1: need to decide the business structure
Step 2: Finance, decide how to finance the business
Company (demand securities, mortgage)
Sole trader (individual)
Partnership (all the partners involved)
Limited liability company (can issue shares- allow outsiders to contribute to the business with limited liability, acquire debt in the same way of partnership and sole trader)
*In NZ, can have a person company (get disadvantage because bank may not lend money to that company as bank may treat tat company (small company) in the same way of treating sole trader and partnership.
Must personally guarantee the debt repayment, main reason (because you will be individually and collectively fully liable for the debts, creditors can attack all the personal assets.
Step 3: Risk
Sole trader- fully responsible for the debt, bankruptcy faced by sole trader can be deemed as personal bankruptcy.
Partnership- fully liable for all the debts (all partners), everything partners own is reliable to pay for the debts.
*More dangerous then sole trader
- Not only liable for your own shares, fully liable for all the debts of the partners
-you are liable for all the debts whether or not you are at fault
-creditors can choose to claim payments from anyone of the partners or all partners
* Another condition: Limited partnership (started year 2008)
Not the same as silent partner
Need a general partner
Limited partner do not have the right to manage the business, cannot involve in decision making, can only involve in investment decision making
Limited liability company- minimise your risk if investing in this company, lose the value of shares, creditors cannot attack you on the payments