Report for the Residents on Cottonolia Island

Report for the Residents

On Cottonolia Island

Key Facts

Farm produces in Cottonolia Island can get three times as much as the mainland in Australia. We have a plan to make our products sell to the mainland. Currently, there are three groups show greatly interest in this program.

Wealthy retirees, who own lots of money, are looking for profitable ways to invest.

Farming clients, who are professionals in farming, are keen to export their products to mainland.

A boat building family, who has the skills to build huge vessels, also would like to join in.

Those groups in Cottonolia Island can be incorporated so that they can use their resources in a formal economy way while benefit from ‘incorporation’. Give my report meaning, I have make an assumption that I am not one of those three groups but have the ability to combine all the resources together. This short business report is organized as follows: Section 1 explains the decision on incorporation of a company. Section 2 discusses the main advantages and disadvantages of incorporation. Section 3 introduces the key steps and requirement for incorporation. Following, section 4 make some recommendation for running the business on Cottonolia Island.

1. Decide on a best suitable business structure

The move to create corporations in Cottonolia Island was begun to give those groups business opportunities and involve them in the economic life of their island. As far as advantages to incorporation, there are a number of business structures can be considered to be used. In choosing the most suitable form for our business, Corporation act states that we should base on our own situation and the goals that we have.

A sole trader ship, which is the simplest form, is not suitable form because of raising capital will generally depend on the trader’s personal credit. And without wealthy retirees’ funds, we won’t be able to proceed with our business. Partnership is probably the most common form for a small business. However, there is a limit on the size of most partnership that cannot exceed 20 partners and if our business demand more money to expand, it is difficult for new investors to enter as it needs all partners’ admission. Considering the fact that our business will become bigger if we operate well; partnership is not best form as well. Therefore, we may consider incorporating a company when establishing a business.

There are different types of company and the most common one are Public Companies and Proprietary Companies (Corporation Act S112). Since our business would start at a small or medium size at the beginning, we prefer to incorporate as proprietary