The wife who is not well acquainted with the accounting procedures cannot cope with the necessary documentation due to lack of expertise as the business grows. The accountant now versed with the knowledge and having studied the financial statements of this sole proprietor suggests that he should incorporate (Derek, pg. This means that he should actually convert this sole enterprise into a limited company which would ensure that the firm has limited liability. Gino and Marcia question whether this limited liability means that they will never have to be at risk of paying the obligations of their business or even whether they will have to issue shares to other people who might buy them from then stock exchange and then share profits with them.Based on Associations Incorporation Act 2009 and the Partnerships Act 1982, it is true that Gino and Marcia upon incorporation into a limited liability company will not have to be at risk of meeting the obligations of their business. Incorporation of a company involves various steps such as preparation of proper financial and audited statements and memorandum of associations and articles of associations (Derek, pg. Several meetings are held by the leaders of the firm to approve the incorporations and important leaders such as the first directors, secretary and advisors are selected. The money held in stock is the then converted to shares and each shareholder is documented with the shares held. An institution is then registered with the registrar of companies when the proper documents are provided (Greenleaf & Spears, pg.The Partnership Act, 1892 (Cap 29) provides. Compensation issue.
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