Mary, Elizabeth and Bill run a business which sells imported European groceries online and at its bricks and mortar store in Melbourne. The business has an annual turnover of $6,000,000 and 30 employees, and profits of the business are shared between Mary, Elizabeth and Bill. Mary, Elizabeth and Bill would like to expand their business by importing new groceries from Asia and buying another store in the Docklands which they hear is running at a loss. They do not want to take out a loan from a bank or bring in any new people into the business.

Question 1(b) [5 marks] Mary, Elizabeth and Bill have heard about trusts and they want you to explain a trust, how trusts are created, and whether participants in a trust are exposed to any liabilities.

Question 1(c) [5 Marks] Mary, Elizabeth and Bill also want advice as to whether they should incorporate a company. They want to know: What type of company you would recommend for their business and why would you recommend this type of company?