Different Types of Companies and Their Working

BMP3002 BUSINESS IN
PRACTICE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
SECTION 1.....................................................................................................................................2
Different types of companies and their working.........................................................................2
SECTION 2.....................................................................................................................................3
Different companies’ formation..................................................................................................3
SECTION 3.....................................................................................................................................5
3.1 Different business structures..................................................................................................5
3.2 Impact of external factors......................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
1

INTRODUCTION
Businesses, while operating have to consider a variety of aspects that can influence the
overall decision making and formation of these businesses (Gryshova and et.al., 2019). This
report will discuss what are the different legal entities that a company can adopt and how better
results can be obtained. This report will also illustrate the impact of external factors on the
business operation and the overall conclusions that can be drawn regarding the selection of
business type. Lastly, an appropriate conclusion will be provided summarising all the key points.
MAIN BODY
SECTION 1
Different types of companies and their working
There a variety of companies and different levels at which they operate. This depends on a
number of factors such as the allowed or registered number of employees that are working,
different characteristics based on which they operate and other similar conditions in which they
operate.
Micro Business: The micro business can be defined as the one where there are very small
number of employees ranging from minimum 1 to maximum 9 employees. Further The
Companies Act of UK also categorises the micro business as the one which has turnover less
than £2 million. Mainly, the micro businesses are operated by individual owners and their
companies operate at a small level. For example, Boss Brewing Company, operating in South
Wales, is owned by 2 individuals and they mainly operate with the aim of creating differences in
the way women leaders are perceived (Tumbas, Berente and vom Brocke, 2017). This is an ideal
example of the characteristics portrayed by small business who have higher number of total
employees employed but their overall revenue or profit generation is comparatively lower than
the other size businesses.
Small Business: Small businesses have been defined in the UK’s Companies Act, 2006 as the
one which does not employ more than 50 employees in the company and further the turnover
should also be limited to £6.5 million i.e. it should not be more than this. Further the balance
sheet total should also not exceed than £3.26 million in an annual year. The characteristics of
small business are more or less similar where the main aspect of their operation is that they are
not more than 50, their scale of operation is limited and lastly the revenue generated is very
2