Question

Estate Planning A. In terms of minimizing tax liability, how would estate planning differ from a partnership to a corporation? B. For estate planning purposes, what are the advantages of setting your business up as a corporation versus a partnership? Defend your response. C. Describe your company’s succession plan and whether or not it aligns with your company’s vision. D. Based on your responses, what estate planning strategy would be most effective in minimizing tax liability? Why? IV. Trusts A. Draw a conclusion about the purpose for the company’s trust based on the research of your company. B. Why would a small business owner want to set up a trust and how could it be used for estate planning purposes? C. Evaluate the similarities and differences between trusts and corporations. In an attempt to protect income, which would be most suitable for a company?

Answer 1

A private limited company is a voluntary association of not less than two and not more than fifty members, whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its shares or debentures. Its main features are :- * It has an independent legal existence. The Indian Companies Act,1956 contains the provisions regarding the legal formalities for setting up of a private limited company. Registrars of Companies (ROC) appointed under the Companies Act covering the various States and Union Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories. * It is relatively less cumbersome to organise and operate it as it has been exempted from many regulations and restrictions to which a public limited company is subjected to. Some of them are :- it need not file a prospectus with the Registrar.

it need not obtain the Certificate for Commencement of business.

it need not hold the statutory general meeting nor need it file the statutory report. restrictions placed on the directors of the public limited company do not apply to its directors. * The liability of its members is limited. * The shares allotted to it's members are also not freely transferable between them. These companies are not allowed to invite public to subscribe to its shares and debentures. * It enjoys continuity of existence i.e. it continues to exist even if all its members die or desert it. Hence, a private company is preferred by those who wish to take the advantage of limited liability but at the same time desire to keep control over the business within a limited circle and maintain the privacy of their business. Advantages * Continuity of existence * Limited liability * Less legal restrictions Disadvantages * Shares are not freely transferable * Not allowed to invite public to subscribe to its shares * Scope for promotional frauds * Undemocratic control

SINCE INVESTMENT AMOUNT IS LESS I WILL SUGGEST PARTNERSHIP, SINCE LLP WILL REQUIRE MORE COMPLIANCE WORK.