1. Each group is required to form a business and to write a brief
Introduction about it (name, services or products, legal form, merchandising or manufacturing, retail or wholesale, etc...)
2. In deciding on the legal form for your business, discuss the reasons for your choice.
3. Discuss the different financing options to set up your business and the reasons for your choice
4. Briefly define the role of accounting as it relates to your business (your answer should include accounting information, users of information, accounting process, financial accounting and management accounting, etc..)
Hardwood Joinery Pty Ltd.
Hardwood joinery is a propriety limited company operating in the manufacturing industry and is directly involved in the manufacture, distribution and installation of joinery products. Due to being propriety Limited company, Hardwood Joinery has many advantages that apply to being a propriety limited company such as its limited liability to shareholders that attract more members to partake as shareholders. In this legal form the business ownership is easily transferrable to another entity, shareholders can also be employed to work for the company and be able to trade anywhere in Australia. However, with these advantages comes disadvantages such as the company is expensive to establish, which requires a large capital, but being a propriety limited, the company has access to a wider capital and skills base. Another main disadvantage is the companies reporting requirements are complex at times and the financial records and affair made public. Shareholder profits that are distributed can be taxed depending on amount or location. (Business.tas.gov.au, (2015). The management of the business concluded that this legal form is suitable for the Hardwood Joinery Pty Ltd. as the benefits and advantages outweigh the disadvantages of the chosen form.
To finance the business the management will have to discuss certain requirements and understand the costs that will need to be accounted for, such as the business registration fee, solicitor’s fees, insurance, name registration and its permits and licensing. (Westpac, 2015). Management will be required to make a business plan, where the plan depicts the probable costs that will arise for the first year of operating, as well as a profit margin plan to determine the projected profits that the business aims to make within the first year. The management will have an initial capital, as well as an appropriate loan given to them from the bank, where the bank has reviewed the business and profit margin plans to approve a large loan sum of money with interest repayments. The reason for choosing a loan and owners initial capital as the main finance solution is that the company is not able to raise or fundraise money from the public due to share issues (Business.tas.gov.au, (2015), so the most logical and easy decision from the management is to apply for a loan from the bank and prove that the business will be able to thrive and repay the loan with added interest.(question 1, 2 and 3).