Become a paper millionaire - quickly.
As discussed in "How to get a guaranteed income
of $200,000 per year", you can get a lot of
operating capital by forming a Public Limited
Company and issueing shares to raise money.
You can issue shares to third parties, and also
give yourself as many shares as you like. As per
the example in the above mentioned guide, if you
issued yourself with 300,000 ordinary shares
which eventually obtained a market price of $8
per share, you would be worth $2,400,000 on paper.
One of the many advantages of forming a limited
company is that the company is recognised as a
seperate trading entity to it's owners and
liabilities created by the company need not be
underwritten by the personal wealth of the
owners.
We must point out ,though, that an ordinary
limited company cannot sell shares to the general
public: to do so would require it to "go public",
that is, to become a public limited company.
Small and newer limited companies may have
difficulty obtaining a full stock market listing,
but they may take up the option of becoming
public without a full stock market listing. This
method is called joining the Unlisted Securities
Market.
The Unlisted Securities Market allows your
company to go public whilst only making as little
as 10% of the capital available to shareholders.
The five years of records that are required to
become fully listed on the Stock Exchange are
also not needed, and the advertising requirements
are also much less.
If you operate as a sole trader or as a partner,
you and your partners, where applicable, are
personally responsible for all the debts and
other liabilities of your business. If your
business was to fail with large debts, you could
end up having personal property taken from you bu
Court Order, even loosing your home if it were
required to satisfy large debts.
With partnerships, partners are jointly and
severally liable, so each of you is responsible
for any of the debts created by any of the other
partners. This could to lead to problems where a
partner incurrs debts of which the other partners
are not aware. It is possible for a partner to
run off with the assets and leaving the remaining
partner(s) to suffer the consequences. If trade
as a limited liability company you will not face
these dangers.
A limited liability company can do business in
the same way as a sole trader or partnership, but
has certain advantages:if you have to go into
liquidation you do not have to pay any of the
debts of the company from your own pocket. The
only liabilities which you can be held
responsible for are back taxes.
By raising capital by the sale of stock,
thousands of dollars in bank interest charges can
be saved by not raising the cash from a bank.
Sole traders or partnerships do not have this
advantage.
Other advantages of the limited company lie in
the tax field:Taxes paid by the indervidual
directly to The Department of Social Services can
be put into pension funds, and should you face
company bankruptcy, you can write off up to
$100,000 on a tax return, but not face any
personal damage done to your credit rating.
