Question

We are now 10^th August 2020, and the dispute over Numbers R’ US is now settled. The ads from Sparkling Ads are proving very good and customers are rushing in. The firm keeps on growing. Their revenue is now reaching $49 million. They have had to employ many more employees. The works force is now 150 employees. Tom and Michael are wondering whether it is time to change business structure. They will be happy to provide the capital but as the dispute with Sparkling Ads has shown, they are currently very vulnerable. They have the following requirements:

1. They want to minimise their income tax.
2. They want to be able to protect assets. They have recently bought a new office space and upgraded their offices to the new brand new fully furnished floor in an office tower on Grenfell Street. The total of their gross assets is $10 million.
3. As the profits grow, they want to be sure the profits can be retained for business development and further expansion.

1. What business structure would you recommend? What would be the advantages and disadvantages of relevant business structures in this context? (10 marks)

On 26^th August 2020, Numbers R’Us is incorporated. The same day, Chidi come into the office and is hit by an office trolley full of new computer equipment. He falls to the floor and his leg is badly injured. He will require surgery and rehabilitation.

Is Chidi entitled to worker’s compensation? Justify your answer.

Answer 1

Solution:

A.I will recommend a limited liability partnership(LLP).A limited liability partnership(LLP) is a partnership in which some or all partners(depending on the jurisdiction)have limited liabilities.It therefore can exhibit elements of partnerships and corporations.In an LLP,each partner is not responsible or liable for another partner's misconduct or negligence.

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Advantages of Limited liability Partnership include:

• protecting the partnership name
• designate and non-designate members
• the LLP is deemed to be a legal person.
• flexibility
• limited liability protects the members personal assets from the liabilities business. LLP's are a separate legal entity to the members

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Disadvantages of limited liability partnership include:

• an LLP must have at least two members
• public disclosure is the main disadvantage of an LLP
• income is personal income and is taxed accordingly
• profit can not be retained in the same way as a company limited by shares

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B.Yes,Chidi is entitled to workers compensation because was injured at workplace.Workers compensation is a type of insurance that covers the lost wages and medical treatment for an employee that needs to take time off work due to a work-related injury.

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Workers compensation insurance,also known as workman's comp,provides benefits to employees who get injured or sick from a work-related cause.It also includes disability benefits,missed wage replacement and death benefits.Workers' comp also reduces your liability for work-related injuries and illnesses.