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Alan Moser and Stephanie Philips operate a successful software business in Brisbane. Alan and Stephanie are existing clients of your accounting firm CPT Accountants. Their business currently operates as a partnership but due to expansion plans they are considering incorporating the business (ie becoming a company). They wish to clarify the following points before making a decision and have asked CPT accountants to write a report answering the following:
What is the difference between forming a proprietary (private) company and public company?
There is substantial difference in the reporting requirements and tax basis for private and public companies. However, the biggest difference is how the legal entities deal with liability. Under a sole proprietorship and a partnership the owner can be held liable for many different problems that the business incurs while under a public model the company's owners have a limited liability. This offers the investors in a public company a line of protection...
For example, if someone tripped and fell due to some kind of negligence and sued the company, then under the private model the owners personal assets could be subject to compensation but in the private model the company's owners would be protected from the legal action. Therefore the public company model can help protect personal assets which are one of the major advantages to this form of ownership.
Another difference is that ownership is generally easier to transfer in a public company vs. A private one. Generally in public companies there will be some share that can be bought and sold that represents owners' equity and larger companies can be traded on a market. However, even the smaller public companies must issue shares even if they are not traded on a public market. This also makes it easier to buy and sell them as opposed to a private or proprietary company. Proprietary companies will have to establish a value for the business based on the financial statements and goodwill where as a market can establish share prices quicker and easier for ownership.
2. What regulation applies to a proprietary (private) company vs. A public company?
The regulations are definitely stricter for a public company…
……South African Municipalities Municipal Revenue Loss Reduction through Improved Municipal Valuation Methodologies:Balance Sheet Enhancement of South African Municipalities to Improve Rates and Taxes Revenue GenerationAbstractThis study examines the property valuation process of Municipalities in South Africa and develops a strategy for strengthening that process in order to more efficiently value properties and ultimately to enhance municipal balance sheets and increase revenue streams. This study proposes an innovative valuation method based
PRACTICES RELATING TO STOCKHOLDERS' EQUITY Hello. I write a project paper Accounting-302 (intermediate accounting 2). The topic Stockholder's Equity corporation. The emphasis practices,, corporations operate. For, I identify company ( - company) conduct a mini case study topic Stockholder's Equity company. Common practices relating to stockholders' equity Stockholders' equity is an item of the balance sheet that represents the capital that has been raised by the investors in the business in exchange
Paradox Marketing Implementation for Business Sustainability in Indonesian Telecommunication Company The study provides the analysis of paradox marketing strategy implementation for business sustainability for Indonesian telecommunication company using the Telkom as a center of investigation. The research objectives have been achieved and research questions answered using both the primary and secondary research. The secondary data are collected using a comprehensive literature review from various scholarly research articles. Moreover, comprehensive literature
Accounting (Auditing) The information that an auditor gathers as he runs analytical procedures in an entity he is auditing and as he gets better acquainted with the organization must be enough in determining materiality and assessing risks. Materiality is very important especially in helping the auditor determine what kind of audit report to be given. The auditor has to make reference to two key issues as regards what areas the financial
Audit planning is the first step in establishing the basis of the nature, timing, and extent of the overall audit strategy to determine the validity of the financial statements. An efficient and effective audit plan provides for a thoroughly and properly planned audit (The Importance of Audit Planning). It helps to reduce audit risk to a low level. Audit planning ensures appropriate attention to critical areas and that potential problems
The first three organizations in line to recuperate their funds were Citigroup, J.P. Morgan and General Electric Group. They had been offering financial solutions and encouragement to purchase the WorldCom stock based on a favorable business relationship. However, at the time when bankruptcy procedures were commenced, the three organizations recognized their losses and intended to recuperate them. A succinct presentation of the period surrounding the crisis could be reveled by