GK
BUSINESS MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The business has a legal name
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The business has an ABN
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The business becomes a separate legal entity as a company
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The business is registered for GST
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Detailed explanation-1: -Incorporation is the broad term to describe a business registered with a state to become a separate legal entity. That business entity often is owned by shareholders (even if it is a single-member owned corporation) that may also be overseen by a board of directors.
Detailed explanation-2: -It is a fundamental principle in law that once a company is incorporated or registered, it obtains a legal existence separate or different from its owners, directors, and officers. The company becomes a legal person that has rights and obligations.
Detailed explanation-3: -What is the difference between ‘separate entity’ and ‘separate legal entity’? Separate entity is basically an accounting concept where as separate legal entity is a legal concept which overrules the accounting concept of separate entity.
Detailed explanation-4: -Separate Legal Entity: A company exists as a separate legal entity which is different from its shareholders and members. Due to this feature, shareholders can enter into a contract with the company and can also sue the company and be sued by the company.