Memorandum of Advice Case Study - Law Assignment Help

Assignment Task

You must be the new accountant. I have just met with a new client, Jacqui Braxton. She runs her own computer business and is looking to expand. Jacqui has had enough of running the business by herself and has come to us, seeking advice on ways she could potentially structure/ restructure her business.

By way of background, Jacqui has been operating as a sole trader for approximately 5 years. She has landed a few contracts to supply and install computers into local schools. Following the disruption to schooling, and requirement to undertake home schooling, she wants to establish a 24/7 IT service support arm of the business, to secure service contracts with the schools she has already supplied to.

Jacqui wants to purchase a bigger warehouse and a fleet of vehicles. She estimates this will cost approximately $500,000. As part of this, she wants to hire staff to support the anticipated increase in workload. Jacqui mentioned that she had attempted to borrow money to fund the expansion but was informed by the bank that she does not have enough security for the amount required, and cannot meet the required lending and servicing requirements.

Jacqui owns a house, with $100,000 worth of equity. She has $20,000 in a savings account.

She does not want to give up control of the day-to-day operations of her business, but would consider offering part-ownership in exchange for some of the capital required. She has two friends (Sam and Sunny) who are interested in investing, but Jacqui is concerned with the number of failed businesses Sam has been involved in.

Apparently, Sunny can provide $280,000, Sam $175,000, and Jacqui the remaining balance. In our conversation, Jacqui identified a number of key questions and concerns, such as:

• Wanting to minimise her overall tax liabilities;

• Wanting to ensure the choice of business structure would help in raising capital;

• Concerns that the wrong choice of business structure may not attract and retain the right employees;

• Wanting to know how she could be protected from any poor management decisions of employees/ partners/ directors; and

• Wanting to know how she could retain control over the day-to-day decisions of the business.

Required:

Please prepare a memorandum of advice for the client. Advise Jacqui of the potential ways to structure her business, including the strengths and weaknesses of each option for her specific circumstances. Your advice should include a brief discussion of the strengths and weaknesses of each potential option, noting the specific needs and concerns for the client. You must consider Joseph’s assets and liabilities when giving advice. Remember to include specific recommendations on what our client should do – as she is paying us for advice!

As this is a group submission from the team of new accountants, there is an expectation that every person participates and contributes to group work. The advice should consider the following:

1. A suitable format and structure;
2. Appropriate writing style, suitable for the client;
3. Advice which is tailored to the client and not general in nature;
4. Clear comparative analysis of three different business structures;
5. The information is the work of your group, which represents our firm – and not copied from external sources; and
6. That the memo provides clear advice in the form of a recommendation.

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