Scenario:

Lenny Robb and Johnny D'Gold, his brother-in-law started a farming business in 2005 raising sheep on the Western Plains of New South Wales. This business has done well and they are now earning $500,000 in profits and sharing them equally under their partnership agreement. However, they are now both married with 2 children each and they feel it might be better to consolidate the business and to use a Company instead of the partnership structure.

You have graduated and are now working for an accounting firm.

Required:

You are to prepare a report setting out the main features that apply to a partnership and compare those features with use of a Company structure.

Your report should include advantages and disadvantages of moving to company structure as compared with the current partnership. Your answer should also include statutory provisions and case law to support your advice.