What are the advantages and disadvantages of operating a business in a company structure? ADVANTAGESLiabilities are limited to the shares of the companyRaising capital is done from shares making it easyThe business will continue even after the death of the ownersThere is professionalism in the services they receiveIt is much easier to get financing as a company because of the available assets that can be used as collateral. A company is very attractive to a lot of investors and this makes it possible to have many shareholders in it. An owner of the business can also join and work as an employee and this will give him a chance to be reimbursed in form of salaries and many other ways. Those who have shares can transfer their shares freelyA company is a going concern and will only stop its operations if owners decide to dissolve it. DISADVANTAGESGains in the company are shared among many holders. There is double taxationThere are a lot of requirements when starting making it hard to startDecision making is a very slow process because of the many people that are involved in making the decision. It does cost a lot to incorporate a companyThere is a lot of paperwork involved in a company’s incorporationThose that are officers in the new company awaiting incorporation must make known their whole identity up to their addresses while shareholders need not do thatA company can be dissolved either voluntarily or be dissolved involuntarilyDo you think Duncan and/or Lisa should be liable for overlooking the tax liabilities for the company?
Why or why not? They are liable because they are directors of the company and it is their responsibility as directors to be good stewards of the wealth of shareholders and to ensure that the company runs well and get higher returns.
Shareholders may sue the two directors because of negligence in performing their duties as stewards of the wealth of shareholders. As concerning this case taken to court by the Australian Taxation Office, the person that should be sued is the company and not the two directors. Though they never conducted their duties of taking keen notice of their tax liability, they themselves are not the persons to be taken to court but the company. What responsibilities do you think Duncan and Lisa have as directors of the company? Investing shareholders wealth in profitable ventures. Directors are also endowed with the obligation to give their shareholders a report of the company’s performance. They have the responsibility of planning the future of the company strategically to ensure it is successful. It is their responsibility to deal with corporate governance and also act upon their social responsibility as a corporate to ensure a peaceful coexistence with its environment. It is the responsibility of directors to monitor those people that they have delegated duties unto. They have the duty to hold meetings and to ensure that, by the end of the meeting, every agenda that was meant to be looked into has been attended to.