(docs) Business Law Assignment Sample

Business Law Assignment

Table of Contents
Question 1..................................................................................................................................3
Question 2..................................................................................................................................5
Question 3..................................................................................................................................7
Question 4..................................................................................................................................9
Question 5................................................................................................................................12
References................................................................................................................................17

Question 1:Explain to Charlie and Bravo the main differences between a sole trader, a
general partnership and a limited liability partnership in terms of the numbers of
owners involved and the extent of their liabilities.
A business can either be private owned, state-owned or not-for-profit organization where
goods and/or services are exchanged for one another or for monetary value. When planning
to operate any type of business, great care should be taken and professional should be sought.
This is because the chosen business type have implications on requirements, taxes, controls,
paperwork, and other aspects related to running a business.
Sole Trader: As the name suggests, a sole trader is a one who runs his/her business on
his/her own. He/she is the one who is responsible for decision making. Such businesses
areusually kept under personal name e.g., Charlie or Charlie Enterprises (There is no need for
registering the name of business, but the trader must display name and/or business name on
business documents). Being a sole trader, the individual works for multiple clients,
owns/operates a small business with unlimited personal liability. He/she is responsible for all
investment, sales and expenses, makes all trade contracts under trader’s own name, and
retains profit after taxes.He/she owns any business losses such as the trader can be sued for
their business and will bear all debts due to minimal support.
A sole trader must register with HMRC as self-employed.
A general partnership: As explained in The Partnership Act 1890, a general partnership is
the relation which subsists between persons carrying on a business in common with a view of
making profit (UK Government, 2018).
This type of partnership gives a pretty straightforward simple way for individuals to own and
manage a business. It is very similar to sole trader, except in general partnership there are
more than one owner who contribute capital, his or her time, skills and services to the day to
day business activities. Subjected to the terms of partnership agreement (if any) and unlike
sole trader, the business property will be owned jointly and all contracts will be made with
the partners even (if the partnership has not adopted a trading name). In addition to that all,
business debt, obligation and liabilities rest with the partners as individuals but creditors can
claim a partner’s personal assets in the event of a claim (Forbes Solicitors, 2018).
Partner’s personal liability is a matter of concern as in a partnership, as previously discussed
each of the partner is severally and jointly accountable for debts. In an unfortunate instance of

a partner leaving, the other partner(s) would be responsible for the whole debt even if the
debts were initially acquired by others(Korchak, 2017).
Members of general partnership must also register with HMRC as self-employed.
Limited Liability Partnership: A limited liability partnership ("LLP") is a type of
partnership which adds another person to a business whilst processing profits and losses
through one income tax return.This type of partnership however, provides greater internal
flexibility to a structure of a private company as partner liabilities are limited/individual.
This partnership structure (i.e., LLP)is owned by its members as a separate legal entity to
operate/make business contracts, and staff employment.It sues and can be sued, much like a
private company. The members/partners will be charged income tax on their earnings (similar
to the tax procedure of a general partnership).
Members of Limited Liability Partnership must also register with HMRC as self-employed.