Answer:
A private limited company is an appropriate legal structure for the A and N partnership business to continue.
Advantages of a private limited company:
⢠Limited liability: As a private limited company, the liability of the business would be limited to the amount of money invested in it by the shareholders. This means that the shareholders would not be personally liable for any debts in case of bankruptcy.
⢠Increased credibility: Private limited companies are seen as more credible than sole traders or partnerships, which can help when it comes to attracting customers and investors.
⢠Access to finance: Private limited companies have better access to finance, such as through bank loans, venture capital and other forms of external finance.
⢠Separate legal entity: A private limited company has a separate legal identity from its shareholders and directors, meaning that the company can enter into contracts, buy and sell assets and otherwise conduct business in its own name.
Disadvantages of a private limited company:
⢠Cost: Setting up a private limited company can be more expensive than forming a partnership or a sole trader. Fees may include company formation costs, legal fees, accounting costs and other professional fees.
⢠Complexity: Running a private limited company involves more paperwork and regulatory compliance than a sole trader or partnership. This can be time-consuming and costly.
⢠Loss of control: The shareholders of a private limited company have less control over the day-to-day running of the business than a sole trader or partner. This can be a disadvantage for those who want to maintain control over their venture.