PA Tutorial Test 1
Group 3
a) What form of business organization (proprietorship, partnership, or corporation) do
you recommend that Natalie use for her business? Discuss the benefits and
weaknesses of each form and give the reasons for your choice.
It is suggested that Natalie starts a sole proprietorship. Here are the three main reasons:
1. Natalie’s business is small — small classes do not require much management or
capital to commence (she has very little to no start-up capital).
2. She doesn’t have a financial background so we should limit paperwork and taxes
(sole traders earning under A$18,200 do not have to pay taxes in Australia).
3. She does most of the work (teaching, organizing, etc.) and the business is not
expected to generate high profits, so she deserves to receive all the profit.
Sole proprietorships
Advantages
Disadvantages
– Easy to establish
(low start-up cost and simple
– Unlimited liability (monetary)
– Responsible for all decisions
