I need to set a Limited Liablitliy company this is because Limited liability companies, or LLCs, are becoming more and more popular, and it's easy to see why. They combine the personal liability protection of a corporation with the tax benefits and simplicity of a partnership. In addition, they're more flexible and require less on-going paperwork than corporations.
The type of business I want to set up is a partnership. The advantages and disadvantages are stated below:
The documents I will have to draw up are ‘articles of association’ and a ‘deed of partnership’. To fill in a Deed of Partnership my partner and myself will have to decide and agree on the following (main agreements) :
The capital to be contributed by each partner - £100,000 each (£2000 from other contributors – they shall get a share in profits and shares)
The rate of interest to be allowed on partners capitals – 10% each
The rate of interest to be charged on partners drawings – 12% each
Any salaries payable to partners – separate accounts (with half of money in each)
The ratio in which the remaining profit / loss is to be shared – ½ each
We will also need to decide the working role of each partner; banking details; payment of tax; insurance arrangements; voting rights and arbitration arrangements; withdrawals and expenses due to each partner; changes in the members of the partnership; arrangements for ending the partnership; and arrangements in the event of the death of a partner.
The location of my business will have to start off as a small factory (including offices) because of all the other expenses. It will be just North of London so it is in an ideal location to serve London and South England. This means it is linked to the business environment. I have chosen this area because there is a large population. It will be situated in a Greater London town so it will attract customers.
The production factors I will be using to produce the furniture products are labour (wages), capital (rents/overheads, rates, machinery, tools, tax, insurance) and land (materials). My business sector is both secondary and tertiary because I will be making, selling and transporting goods.
The objectives of my business are:
1. To break even and survive (this is very important, it means that I wont get profit but I wont have a loss).
2. Profit maximisation and sales will be the main objective (not only will I want to survive for a long time, but make profit too. The main stakeholders to benefit will be the owners)
3. Sales objectives (to make sales higher so to make more profit – this can be done by advertisement).
4. Freedom and independence (only having to talk over decisions with one other person).
The stakeholders influenced will be my partner and I and all other contributors who have put equity into the business. My partner and I will each put £100,000 capital into the business (gathered from accounts and loans). There are also two smaller contributors paying in £2000 into the business. This means the business will be able to start off with £204,000.
