a. Briefly evaluate the four factors to consider in choosing a legal structure for your business...

a. Briefly evaluate the four factors to consider in choosing a legal structure for your business

b. Business is defined as an ORGANISED and PURPOSEFUL human activity designed to CREATE VALUE for others and is intended to continue to provide such value overtime as going concern. Discuss

c. With examples, very briefly differentiate between opportunity versus Necessity Entrepreneurship

d. very briefly discuss how you would evaluate a business opportunity

Expert Solution

a)Following factors must be consider in choosing a legal structure for business:

i)Control:An important factor to consider when selecting your legal structure is the level of control you wish to have over your business.If you wish to own and operate the enterprise completely alone then being a sole trader would be the most appropriate structure.

ii)Limitation of Liablity:Choice of leagal structure have important implications on your potential legal liablity.Considering the extent you need to be protected from personal legal liablity is important before choosing a business structure,as a considerable advantage of a complex legal structure such as a company,is the protection from your personal assets becoming liable from any debts and losses incurred.

iii)Tax implications:Legal structure of business have significant effects on the amount of tax you pay and the kinds of tax that you must pay.A sole trader enjoy tax benefits from being able to claim on a personal tax return and those in a trust do not pay income tax on profits.

iv)Cost of start up:As the legal structure of business become more complex,the cost associated with establishing the business also increases.For example cost of establishing company is higher than cost under sole proprietorship.

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