First Principles of Business Law

7. Companies

7.1. Case study

In 2002, Edward Delgardo completed his plumbing apprenticeship and became a qualified plumber. He then worked as an employee of a plumbing company for six years before starting his own plumbing business. He began as a sole trader, and then formed a partnership with Ronnie Tran.  Edward is married with two small children. He and his wife live in a house that Edward inherited from his deceased parents. The house is now worth $450,000.

New facts: Edward has joined in a partnership with Ronnie Tran to run a plumbing business called E&R Plumbing. However, the business has expanded quite rapidly, and they are taking on larger and larger projects. They often contract for supplies worth many thousands of dollars, and incur other costs for which they are personally liable. They are also uncertain how best to handle future growth of the business. They would like a business organisation that allows them to limit their personal liability, while at the same time allowing for future investment and growth. They would also like to pay less tax than they currently do on their profits. They are considering running their business as a company.