1. John has been conducting a great business with a pie and pastie factory. He is now making $300,000 in profits each year but has a big income tax bill. He would like to expand the business and needs $200,000 to buy more pie-making machines. He is not sure whether he should setup a company and issue 200,000 shares to his friends, or else setup a company with himself as the only shareholder and try to get a bank to lend $200,000 to it. Boris, his friend, suggests that he could provide $200,000 but only if they form a partnership. Boris suggests that future profits should be shared 40% to John and 60% for Boris as Boris is putting in a significant amount of capital. 
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3. Explain the advantages and disadvantages of these alternatives. Your Answer should include references to legislation and case law.

Answer rating: 100% (QA)

Ad vant ages of Inc orpor ating a Company and Iss uing 200 000 Shares 1 Limited Li ability John will have limited liability with this option as the company will be liable for any debts or losses This ... View the full answer