Small Business Entrepreneurship Assignment Essay

Small Business Entrepreneurship Assignment - Essay Example Source: Sofat & Hiro Q1b: What benefits, other than more capital, would a partner bring? If two or more individuals share capital in a business, it is recognised as a partnership. Partnership appears to be a beneficial for small businesses because it is the simplest form of business and the partners share the profits and loss of the company. In a start-up business, the risk of failure of business is high therefore, by sharing capital both partners share profit and loss, thereby, having less money at risk. In other words, the partners have the shared financial commitment. Second, the expertise and skills of the partner can improve the operational and financial performance of business. Third, partners have to fulfil very few legal formalities because these enterprises do not have legal status however, they need to have licences. Q1c: In 1996 Finch said ‘if I become your partner, we must have a written agreement –it’s illegal not to’. What are your views on th is? In a partnership business, the partners are not legally bound to undergo any legal agreement however, creating written agreements in partnership is important because of a number of reasons. Through a written agreements the two partners could have define the responsibilities and essential terms of the contract and in the case of any conflict between them, the written agreement could help them to resolve the issue. Therefore, in my opinion, the idea of Finch to make the written agreement is a good suggestion however, saying that its illegal not to have the written agreement is not right because in the legal framework of formation of a company in the UK, no legal agreements are required for the General Partnerships because these enterprises do not have a legal status. What advantages would there be in becoming a private limited company rather than taking on more partners? Rather than taking on more partners, become a private limited company has been advantageous for the company bec ause a private limited company has a legal identity. The business owns the property and assets of the company and unlike partnership assets and property are not owned by the partners. The partners are personally liable if a partnership business fails however, in a private limited company, the liability of the shareholders is only limited to the share they have in the shared capital. It means that if a partnership fails, the partners would be personally liable to sell their assets to pay off the loans and borrowings whereas, in the private limited company, the assets of the company would be sold. In other words, the personal assets of the shareholders or the director of the company cannot be used to pay off the loans and debts in a private limited company (Forma Company). Moreover, in a partner if more partners are added, the chances of conflicts and issues are increased whereas, in a private limited company shareholders are bound by the legal agreements and they have limited liabili ties which reduce the chances of conflicts. Q2a: In the case study it was said that the company ‘went public’. What effect would this have on the company’s name? The change in the company from a private limited company to a public company would have brought various benefits to the company. First, the value and recognition of the company would have increased because company got listed on the stock exchange which would have made it popular in the