Question 2

Devon is a successful sole practitioner offering business consultancy services to a number of local companies. Her chief competitor is Carmen, who offers similar services. Devon and Carmen decide that they wish to work together but are unsure as to which business structure would be most appropriate. They seek your advice regarding which business structure would be most suitable, bearing in mind:

• they wish to avoid significant levels of formality and regulation

• they want to have flexibility in establishing the procedures by which the business is to be run

• they want to be able to run their affairs in private

• they want to avoid personal liability for the debts and liabilities of the business

• the process of creating the business should be relatively cheap and quick

• they do not want to invest significant amounts of their own capital in setting up the business and will probably wish to raise capital from outside sources

• they wish to take on employees.

Discuss to what extent the various business structures fulfil all, or some, of the above aims and advise Devon and Carmen which business structure would be most suitable for their business. (15 marks)

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