Question

Business now employs around 20 people and demand is increasing rapidly. The partners need to invest much more capital in the business but want to avoid a lot of risk as they both have families

dependent on the income from the business. Their main competitor ShoesForu plc, which has a much larger market share than N and A, and can afford expensive advertising.
Q1) what is meant by partnership?
Q2) identify two possible benefits to amel and nouran to the partnership legal structure
Q3) identify two possible benefits to shoesforu plc of being a public limited company
Q4) identify two possible drawbacks to amel and nouran to the partnership form of legal structure
Q5) if the n and a partnership business continues, recommend whether a private limited company is a suitable form of legal structure for this business. Justify your answer by considering the advantages and disadvantages of a private limited company

Answer 1

A partnership is a form of business organization where two or more people work together to own and run a business, sharing responsibilities and profits. Possible benefits to Amel and Nouran include shared workload and the opportunity to share profits, while benefits to ShoesForu plc of being a public limited company include raising capital and increased credibility. Possible drawbacks to Amel and Nouran of the partnership form include personal liability and limited life. A private limited company may be a suitable form of legal structure for N and A, providing limited liability and the ability to raise capital, but also with added complexity and potential restrictions.

Step-by-step explanation:

Q1) A partnership is a form of business organization that involves two or more people working together to own and run a business. In a partnership, the partners share the responsibility of running the business and also share the profits.

Q2) Two possible benefits to Amel and Nouran of the partnership legal structure are:

1. The ability to share the responsibilities and workload of running the business.
2. The opportunity to share the profits and financial benefits of the business.

Q3) Two possible benefits to ShoesForu plc of being a public limited company are:

1. The ability to raise capital by selling shares of the company to the public.
2. The increased credibility and visibility that comes with being a publicly traded company.

Q4) Two possible drawbacks to Amel and Nouran of the partnership form of legal structure are:

1. The partners are personally liable for each other's actions and debts incurred by the partnership.
2. The partnership has a limited life and may dissolve if one partner leaves or dies.

Q5) If the N and A partnership business continues, a private limited company may be a suitable form of legal structure. Some advantages of a private limited company are:

• Limited liability, which means the owners are not personally responsible for the company's debts.
• The ability to raise capital by selling shares, but with more control compared to a public limited company.

However, there are also disadvantages to consider. For example, setting up and maintaining a private limited company can be more complex and costly compared to a partnership. Additionally, there may be restrictions on transferring ownership and selling shares.