Duties of Partners and Directors in Partnership and Companies

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Title page
Name of the student
Student ID

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Contents
Part A...............................................................................................................................................3
Sole Trader.......................................................................................................................................3
Set up............................................................................................................................................3
Administrative cost......................................................................................................................3
Administrative burden..................................................................................................................3
Partnership.......................................................................................................................................3
Set up............................................................................................................................................3
Administrative cost......................................................................................................................4
Administrative burden..................................................................................................................4
Proprietary companies.....................................................................................................................4
Set up............................................................................................................................................4
Administrative cost......................................................................................................................4
Administrative burden..................................................................................................................5
Part B...............................................................................................................................................5
Liability of Partners under contracts entered into with outside parties........................................5
Liability of individuals involved in a proprietary company under contracts entered into with
outside parties..............................................................................................................................6
Part C...............................................................................................................................................7
The duties owed by partners to each other...................................................................................7
The duties owed by directors in companies.................................................................................8
Reference List................................................................................................................................10

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Part A
Sole Trader
In sole trader, an individual carries on the trading and is legally liable for all the profits and
debts1.
Set up
A business name is to be selected and business is initiated. It does not require a separate bank
account.
Administrative cost
The trader liability is unlimited. He pays himself as an employee along with workers'
compensation insurance and superannuation contributions.
Administrative burden
The trader liable for all the profits and debts. The burden includes reporting requirements,
financial records of at least past 5 years.
Partnership
Two or more persons (up to 20 people) when join together to carry on business of continuous
nature with the aim to share losses and profits2.
Set up
A name and state must be selected for registration. An agreement must be drafted and employer
identification number must be sought. A business account to be opened3.
Administrative cost
The partners are held personally liable for the losses..
Administrative burden
The liability of the partners is unlimited.
Proprietary companies
1 Business. 2018. Sole trader. Retrieved on < https://www.business.gov.au/planning/business-structures-and-types/business-
structures/sole-trader>. Accessed on 14th April 2019.
2 Business. 2018. Partnership. Retrieved on <https://www.business.gov.au/planning/business-structures-and-types/business-
structures/partnership>. Accessed on 14th April 2019.
3 Legal. 2018. Steps Involved in Setting Up a Partnership. Retrieved on
<https://business-law.freeadvice.com/business-law/partnerships/setup-partnership.htm>. Accessed on 14th April 2019.