Legal Solutions for Business Organizations

BUSINESS LAW
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Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Explanation and breakdown of three different types of business organisations..........................1
Critical business assessment of different business organisations................................................2
Legal management and funding of different types of organizations...........................................3
Obtaining legal advice and support of disputes arising in a range of areas.................................4
Comparison of legal solutions.....................................................................................................5
Evaluation of effectiveness..........................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1
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INTRODUCTION
Business Law is a very vast field governing many intricate aspects and parts of trading
and conducting business in a normal manner (Schiller, 2019). Clifford Chance is an international
law firm and the quality and Excellency of the legal solutions that are provided by this UK based
law firms are unravelled and unchallenged. In this report, the different types of business
organisation and how they can be legally formulated and regulated will be discussed in detail.
Further, this report will also recommend appropriate legal solutions that can be achieved if there
is any dispute amongst two or more parties in business setting.
MAIN BODY
Explanation and breakdown of three different types of business organisations
Business Structure defines the manner in which the company is formulated and operates
and the legal manner and steps in which they are formulated is different for different types of
business structures. There are three major classifications in the types of business organisations
that can be differentiated on legal basis as well:
Sole Proprietorship: As per the UK law, this is the easiest form of a business structure that can
be adopted and involves a single person as an owner of the entire proprietorship. The first step is
registration with the HM Revenue and Customs and then after choosing appropriate name, an
individual can begin trading.
Advantages Disadvantages
 These are not heavily regulated
 Tax filing is an easier process
 Less Capital requirement
 Solely liable for all the business
liabilities
 Lack of financial control since all
personal and business wealth is linked
 Difficult funding options
Limited Companies: LLC i.e. Limited Liability Company is a private company where the
liability of the director is limited i.e. business itself is responsible for its liabilities (Schwidetzky,
2018). First Directors of the company need to be appointed and then it needs to be registered
with Companies House. There should be at least one director and one shareholder along with
articles of association mandatorily. The company then needs to be set up for Corporation Tax.
Advantages Disadvantages
 The liability is limited without any  The rules are complex and restrictive.
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claim on personal wealth
 Separate legal entity
 Tax only on profits i.e. @21% as
compared to that of sole proprietor and
partnership where it is 40%
 The raising of capital is restricted and
funding through shares becomes
difficult (Knoll, 2019).
 The personal and corporate information
needs to be on record.
Partnership: The partners of the company are personally responsible for all the liabilities and in
order to register for a business partnership, first the partners must be registered for self-
assessment tax, then the business name should be formulated as per the designated rules. After
this business is run as an individual and profits are shared between the partners.
Advantages Disadvantages
 Legal obligations are limited and fewer.
 Ownership and control lies with the
partners.
 The profits are shared directly between
the partners.
 The liability of the partners is
unlimited.
 The access to capital is limited and
various options of long term financing
are closed.
 The exit strategies or options for the
partners are extremely complicated
Critical business assessment of different business organisations
Sole Proprietorship: Setting up business structure as per the sole proprietorship is a very easy
task and there is minimum legal requirement or legislations that are to be followed. It is very
easy to enter into business as a sole proprietor and therefore, it is treated as a great starting point
(Schiller, 2019). The control for decision making regarding each and every aspect lies solely
with the owner of the business and the control regarding the financial decision also remains with
the owner only.
However, this simple form of business structure has additional complexities as well.
There is no distinction in the personal wealth and business income thus making him personally
liable. Further, they gave to pay income tax on personal income as well as in National Insurance
Contributions. Additionally, as a sole proprietor it is difficult to get funding from investors
unless the business is extremely sound.
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