Problem

Your neighbour, Sally Superseller, runs a small business selling deluxe rainwater tanks. Presently, she is operating as a sole trader. Business is good and she wants to expand. Her friend Rhoda Rose has agreed to join her in the business and provide $50,000 to fund the expansion.

1. Sally comes to you for advice on how best to facilitate Rhoda Rose joining her. Which forms of business structure are available and what are their respective advantages and disadvantages in Sally's circumstances. Do you need any further information to be able to advise Sally fully?

2. Sally decides to proceed with forming a company. Advise Sally on the process for forming a company, the type of company that she should register and any prerequisites she must satisfy before becoming a director of the company.