The paper “ Business Entities and Agency” is an impressive variant of the assignment on business. This paper explains the process of starting a new business and the legal and compliance issues pertaining to business registration in Victoria, Australia. The business chosen for this assignment is a small-sized pizza restaurant. The restaurant will be located in one of the suburbs of Melbourne city in Victoria. There is a very high demand for pizza in Melbourne. The business will be conveniently located for both locals and tourists. The desired structure for this business is a sole proprietorship.
Under the laws of Victoria, sole proprietorships do not enjoy the privilege of distinct legal existence from their owners. As such, the state levies taxes on the business owner’ s personal income tax returns. The greatest advantage of operating a sole proprietorship form of business is that the owner enjoys flexibility and control in running the business. The owner can easily alter important aspects of the business to match the prevailing market conditions. Another advantage is that less capital is required to start the business compared to other structures such as a limited liability company or partnership.
In addition, the owner enjoys all profits and is responsible for making important decisions to maximize returns in investment. Because sole proprietors have unlimited liability, creditors can extend credit when needed (Sitarz 2005, p. 62). The most important disadvantage of a sole proprietorship is that the business owner is personally liable for business debts. Thus creditors can seize the owner’ s personal properties to settle claims if business assets are not enough. In addition, creditors can be unwilling to give loans to a high likelihood of business failure, a high turnover rate, and a lack of collateral security.
In such a case, it can be difficult for the business owner to raise enough capital to support long-term plans such as expansion. If the owner dies or becomes incapacitated, the business may cease to exist. Lastly, a sole proprietor lacks professional business management skills compared to corporations and limited liability companies (Sitarz 2005, p. 51).
Australian Government, n.d, Business and company registration, Viewed 31 August 2016 https://www.business.gov.au/info/plan-and-start/start-your-business/business-and-company-registration/registration-and-licences
Business Victoria, n.d, Setting up a business. Viewed 31 August 2016, http://www.business.vic.gov.au/#1007246
Ibp Inc. 2013, Australia Business Law Handbook Volume 1 Strategic Information and Basic Laws, Adelaide: Int'l Business Publications.
Sitarz, D 2005, Sole Proprietorship: Small Business Start-up Kit, Montreal: Nova Publishing Company.