Alan is a computing student who has developed the prototype of a new cloud-based accounting platform. Alan wants to set up a business and sell subscriptions to the platform. To carry this Alan has estimated that it will require $50,000 for set up costs, development, marketing, etc. However, Alan has no savings or assets, and the bank will not give him a loan.

Alan has a friend Zoe who has just inherited $100,000. Alan has been talking with Zoe about either Zoe investing in his business or becoming a business partner.

Alan has come to you seeking advice. Advise Alan on the advantages and disadvantages of the following business structure options:

a. Being a sole trader and having Zoe lend him $50,000

b. Setting up a company and sell 50% of the shares to Zoe

c. Entering into a partnership with Zoe, in return for Zoe investing $50,000 in the partnership