Advise Barbara, Helen and Maureen as to the advantages and disadvantages of setting up a private limited company.

Barbara, Helen and Maureen have been working together for 18 months, running a business in England, making and selling celebration cakes and luxury desserts. They call the business ‘Sweet Pleasures’.

Between them they have been sharing the costs of buying materials, equipment, ingredients and paying the general running costs. They have been splitting the net profits equally (after paying running costs for the business) for the past 18 months. They have no written agreement setting out the terms of their business arrangements.

The business is doing well and recently they have been offered a 12 month contract to supply a variety of their luxury desserts to a very popular delicatessen’s shop. With the expansion of their business they have decided that it would be a good idea to investigate the possibility of formalising their business arrangements and are thinking of forming a private limited company as they have been told this would be a suitable business arrangement for them.

Task 1
Describe the type of business organisation Barbara, Helen and Maureen currently operate under. What are the advantages and disadvantages of continuing to trade as they do at present?

Task 2
Advise Barbara, Helen and Maureen as to the advantages and disadvantages of setting up a private limited company.

Task 3
Barbara, Helen and Maureen want to retain their current business name, advise them as to whether they can do this if they form a private limited company.

Task 4
If they form a private limited company Barbara, Helen and Maureen want to raise additional capital to support their business expansion by issuing more shares or by taking out a bank loan. Explain what implications each method of raising further capital might have upon the running of their business?

Task 5
You should set aside 250-400 words (out of the 2000) to write a reflection on how you went about researching and preparing this work. Your research trail should explain what resources you used eg texts/ journals/cases/statutes and online materials, and why you thought they were appropriate resources for answering the questions. You can discuss such matters as to whether you found enough information in those materials and whether you found them easy or difficult to understand. If this is a resit coursework you may like reflect upon what you have done differently in this coursework as compared to what you did in the first coursework.

For section 1-4 give your reasons for the advice given and where appropriate support your advice with statutory references and case law. All sections carry equal marks.

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