Premise:
Secrecy and confidentiality is very important for any form of any business.
Maintaining secrecy would be really important if the owner of a business is afraid to
share trade secrets and financial documents. A sole proprietorship would be most
appropriate for a business in maintaining confidentiality, as only the sole proprietor is
opened to all the secrets. On the contrary, in Partnership mode of business, secrets
are opened to all the partners. The scope of raising capital is relatively high is
partnerships as compared to businesses solely owned by a single person. An
individual may start a business as a sole proprietor. But, he may not be able to
raise the required capital for his business at his own. Therefore, he can opt for a
partnership form of business but the secrecy of the new business will be compromised.
Question:
a) Why is secrecy important in any form of business? (5 marks)
b) Should the individual opt for partnership mode of business or stick to sole
Proprietorship? Justify your answer with proper reasons. (5 marks)
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ASSIGNMENT SOLUTION:
(A) Why is secrecy vital in business?
A preferred regime of protection of enterprise secrecy has been hooked up. The law has pursued to define commercial enterprise secrets and techniques and the illicit conducts that undermine it, and facilitate criminal motion to guard it and guarantee that it will no longer be disturbed on this occasion, on the way to shield enterprise secrets and techniques.
1. Fearless and insecurity of Loss:
Secrecy enables an enterprise to function without any kingdom of lack of confidence or any form of worry of any loss.
2. New Schemes:
keeping secrets from personnel may assist a business enterprise from the possibility of jeopardizing a brand new scheme, concept or plan of a commercial enterprise through leaks to competitors.
3. To win from competitors:
If the enterprise does now not keep secrecy, competitors may thieve ideas and benefit a lead within the marketplace, and this may adversely have an effect on a commercial enterprise.
4. To gain mortgage:
If any employer will preserve the secrets and techniques then agency will effortlessly get the loan shape any establishments and personal people.
5. Public trust:
Secrets and techniques in the enterprise are very useful in getting and preserving the public consider. People do not go for info if the groups maintain secret statistics.
(B) Should the person opt for partnership mode of commercial enterprise or persist with sole proprietorship justify your solution with right purpose?
(A) what’s a Sole Proprietorship?
As soon as you start doing commercial enterprise by using your self, whether you accept cash to mow your neighbor’s backyard or you sell your homemade rings on-line, you’ve got a sole proprietorship. In some states, if you co-own an enterprise along with your spouse, your enterprise is still a sole proprietorship. For a few commercial enterprise entities, like agencies and LLCs, you have to document formation documents with the state (along with Articles of corporation) to create the enterprise. By means of assessment, you create a sole proprietorship as soon as you take delivery of cash on your goods or offerings, and also you do now not document any formation office work.
Whilst you shape a sole proprietorship, despite the fact that you’re the best owner, you do now not need to work on my own. You can hire personnel, freelancers, and experts to help run your commercial enterprise. But, you are the one answerable for making the choices for the commercial enterprise and all the earnings and losses will visit you.
What’s a Partnership?
When you and a person else begin doing commercial enterprise with the reason of making an earnings, you’ve got a partnership, from time to time known as a popular partnership. The partnership may begin with signing an agreement to work together, or you can have a casual courting based totally on a conversation and a handshake. Your associate might be a character or an enterprise, and you could have a limitless range of companions. As with sole proprietorships, you do not file some thing with the country to shape a partnership.
The advantage of a partnership over a sole proprietorship is that you’ll share the responsibilities, resources, and losses. On the other hand, you furthermore may split your profits, and you may face disagreements over how to run the enterprise. One manner to mitigate conflict is to create a partnership agreement.
