Mr A and Mr B formed AB software company. The company produces software such as accounting software, Antivirus software, Childrens software, Health Apps and Educational software. The couple formed the company as an outside interest, and both continued to work at their current jobs. Mr A develop the software whilst Mr B handled the marketing and distribution. With good product quality and a sound marketing plan, the company grew rapidly. In early 2021, the company was featured widely distributed entrepreneurial magazine. Later that year, the company was featured in The Times magazine. After the article appeared in software section, sales exploded, and the company began receiving orders from all over the world.

Because of the increased sales, Mr A left his other job followed shortly by Mr B. The company hired additional workers to meet demand. Unfortunately, the fast growth experienced by the company led to cash flow and capacity problems. The company is currently developing as many software as possible with the assets it owns, but demand for the software is still growing. Further, the company has been approached by a technology company with a proposal to develop software so that it can sell the software.

Mr A and Mr B have operated the company as a sole proprietorship. They have approached Hani to help manage and direct the companys growth. Specifically, they have asked Hani to answer the following questions:

a) What are the advantages and disadvantages of changing the company organization from a sole proprietorship to limited partnership?

b) What are the advantages and disadvantages of changing the company organization from a sole proprietorship to a corporation?

c) Ultimately, what action would you recommend the company undertake? Why?