（a）Explain two advantages and two disadvantages to Philip of changing PF from a sole trader business to a private limited company． Advantage 1： . . . Advantage 2： . . . Disadvantage 1： . . . Disadvantage 2： . . .

Award 1 mark for each advantage/disadvantage (max 2 advantages/2 disadvantages).
Award a maximum of 1 additional mark for each explanation of the advantage/disadvantage applied to this context.

Relevant advantages might include:
- Limited liability - as the original investment of \(\$ 100000\) as well as his personal possessions are safe
- More capital / easier to raise finance - as he can sell shares to fund the building of the new factory
- Continuity - if Philip decides to leave the shoe making business, then PF will still exist
- May be able to keep control - because he can decide whether to sell shares to expand the business

Relevant disadvantages might include:
- He would not be able to keep all the profits/pay dividends - from the manufacture of rubber shoes
- No privacy / will have to share some financial details - from his forecast statement of financial position
- Legal restrictions in setting up the business - which he would not have when he set up the business 10 years ago
- Owner may not now have complete control / making all the decisions / being his own boss - such as where to locate the new factory

For example: Will not be able to keep all the profit made (1) from selling the shoes he produces (app).

Application could include: rubber shoes; natural rubber raw material; build a new factory; sells in a mass market; increase in taxes; bank loan for the new factory; sister wants to invest in the business; \(\$ 100000\); wants to grow the business; produce a new range of shoes; operates in a very competitive market; started 10 years ago; information from Appendix 3.