Advantages of Incorporating a Corporation for Michael and his Sons

In the present question the issue arises if any advantage will be available to Michael and his sons
if they decide to incorporate a corporation. In the present case, Michaels's sons want to join his
business instead and they also want to expand their family business. However in order to expand
the business, they want to know which business sector will be most suitable and what advantages
will be available if they incorporate a company to manage their business.
In this case, it can be stated that if Michael and his sons John and Adam decided to incorporate a
company, there are certain benefits that are associated with the business structure of a
corporation. It needs to be loaded in this context that these benefits will not be available if
Michael and his sons decide to run their family business as a sole trader or as a partnership.
Therefore even if the costs that has to be in there for registering the company is hired as against
the situation where the parties have adopted the business structure of a sole trader or partnership,
but it needs to be noted that in view of the advantages associated with it, the higher cost of
registering the company can be considered to be the part of expenditures that is related with the
management of the business (Busch, 2009). Another issue that has to be decided in this question
is related with the registration of business name. It is cheaper to register business name, as
against the registration of a corporation. However, it is worth mentioning in this regard that after
the parties have registered a corporation, they are not required to separate the registered the name
as its business name. The reason behind this position is that the corporations’ law provides that
the full name of the corporation is going to end with "Pty Ltd" and it has to be used for the
business (Lipton, 2007).
Regarding the ongoing cost of managing the business, there is a need for registering the business
name that needs to be renewed regularly. The government charges a fee for the purpose of

renewing their business name. As compared to the situation, when a corporation has been
registered, it has to pay an annual review fee to the ASIC. However, a major advantage that is
associated with the business structure of a corporation is present in the form of the limited
liability of its members. In this context, the law provides that the members of the company are
not personally liable for its debt. Therefore, their liability is confined to the shares that are owned
by them. However, the advantage of limited tablet is not available to sole traders and partners. In
the same way, however, this advantage is not available to the parties when they are running a
business as a sole trader or partnership. Similarly, among other benefits of the business structure
of a corporation, a major advantage is associated with the rate of tax that is applicable to the
corporations. While the companies in Australia have to pay flat rate of tax, but the individuals
who are running their business after registering the business name are required to pay tax at
marginal rate. The rate that is charged from the corporations is less as compared to the rate that is
applicable in case of individuals. It also needs to be mentioned in this context that in the eyes of
law, a company enjoys a separate personality. Therefore the identity of the company is distinct
from its owners and directors. In view of this legal fiction, the company can own property in its
own name, and similarly it can also enter contracts. Legal proceedings can be initiated by the
company are against the company in its own name.
Hence, before dealing with the steps that have to be taken for registering the company, it needs
to be decided if the business structure of a corporation will be most suitable for Michael and his
sons. However, on account of the benefits associated with the business center of a corporation, it
can be said that the incorporation of the company will be most suitable option for them. This
advice is particularly appropriate when Michael and his sons are considering expanding their
family business. The family business of Michael is flourishing and his sons, John and Adam are

also willing to join the business. Hence they are looking to expand their family business. For this
purpose, the incorporation of a company will be the most suitable option for them. Apart from
the benefits mentioned above, it also needs to be noted that it is easy for a company to raise
funds that will be required for expanding the business.
Another issue that has been discussing this question is that Michael wants to continue to do
business under its present name. However, his sons want that the name "Sicilian Treats" should
be used for business. As mentioned above, the situation is different in case of registration of
business name as compared to the registration of a company. There are certain issues that have to
be considered by selecting the name for the company. The law provides that the name of the
company should not be similar to the name of any other company. Therefore a name that is
identical with any other company or business should not be selected. In this regard, a search
should be made for seeking the availability of the name. When the name desired by the parties is
available, they can register it as the name of the company (Wymeersch, 2001).
Another requirement that is present in this context is that the name of the company should be
able to reveal the status of the company and the liability of its members. Therefore, when the
liability of the members is restricted to the value of the shares owned by then, the corporation's
name has to end with the words "Pty Ltd". Hence, in this case also, it is possible for Michael to
continue with the present name of the business and at the same time, they can register the name
"Sicilian Treats" as its business name.
Therefore in the end, it can be stated that the above-mentioned benefits will be available to
Michael and his sons. In case they decide to incorporate the company for running their family
business.