Introduction to Business Law - Key Differences between Unincorporated and Incorporated Businesses

This essay explains and evaluates the key differences between unincorporated and incorporated businesses in the context of business law. It covers the advantages and disadvantages of sole proprietorship, partnership, and private limited companies. The essay also discusses the process of incorporation and the legal status of corporations.

Introduction To
Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Critically explain and evaluate the key differences between unincorporated and incorporated
businesses...............................................................................................................................3
CONCLUSION ...............................................................................................................................9
REFRENCES ..................................................................................................................................9
REFERENCES..............................................................................................................................12

INTRODUCTION
Business laws are those laws which is been used in order to make forming of business
organization done in more effective way. These laws covers various aspects that is related over
making business organization attain stability with growth. Such organizations makes various
kinds of rules and regulation developed in relation to various activities of business organization.
These laws makes organizations attain better framework through making various process of
business run in more organized manner. Scope of these laws are wider as they impact
organization directly. Nature is dynamic as it seek over making business attain sustainability
with growth. The essay is based over various aspects related to business organizations and its
types. The main point of discussion in this essay is based over incorporate business organization
and unincorporated business organization with there advantages and disadvantages.
TASK
Critically explain and evaluate the key differences between unincorporated and incorporated
businesses
Unincorporated organizations: These organizations are based over non legal process
which makes business organization formed in more organized manner. These organizations does
not have any kind of legal existence and is been formed with the help of one or more persons
having motive of earning profit. Since there is uncertainty over ownership that makes owner
fluctuate over various issues. Under it members has all responsibility by themselves in relation
to operations of business.(Yastrebov, 2019). Such organization is been formed most commonly
which makes purpose of business to be fulfilled. In these organization there can be one single
owner or more then two owners. These organizations is been provided with various rebates in
relation to tax ans sales payment. Further organizations deals over making new business establish
in more effective manner as process of formation is easy leading upon developing organizational
framework for such organization work in more effective way. These organization helps in
making business development possible from bottom. Such kind of organization is based upon
two kinds of businesses that is sole proprietor and partnership. Further detail explanation is been
provided as Sole proprietorship: These organizations is been refereed as sole trade or
proprietorship which is an unincorporated business. Such organizations has one single owner and
all work is required to be done by the person owning the business. These organizations makes

business achieve profit with revenue. They are considered to be one of the most effective
business organization which has to be established due to lack of government interference. Such
organization makes business established itself in more effective manner which makes newly
formed business attain popularity within market. In these businesses sole proprietor performs
business within its own name. These organizations make personal income tax paid with making
profits earned in more effective way. This means that these organization is very to be established
which makes business achieve its goals and targets. In these organization there is no involvement
of government which leads upon making business done in smooth and efficient manner. Also
due to this unnecessary documentation is not done that helps in making objectives achieved with
more efficiency. Also these organizations end up getting restructured into LLC which makes
expansion easy. Further these are considered as that kind of organization that has been used over
most commonly executive business. In these organization there is only one owner and all
responsibility relies over them only(van Tulder, Verbeke and Piscitello, 2018). The owner of the
business is termed as sole proprietor which makes single owner responsible over act and conduct
which is related to business. Further these organization is been formed in very easy manner
making organization and only requires INHRC number generated and name is required to be
given only for starting business. No other complexity is involved within its formation. There are
various advantages and disadvantages which has been explained as follows: Advantages of sole
proprietorship, Affordable and simple: The most important advantages of sole proprietorship is
that it is simple in establishing and affordable over been establishing with registration to be done
in more effective way. Freedom and flexibility: It includes structure used for establishing sole
businesses which is not complex in nature. Less paperwork: The business owner is required to
have extra paperwork for making some people register as sole proprietorship rather than making
incorporation of business done. In this mandatory to file yearly documentation and also it leads
over making overhead cost reduced. Disadvantages of sole proprietorship,No liability
protection: This is major drawback of such organizations which is known as personal liability.
Under it sole responsibility is over owner of business. This makes all debts and litigation been
deal by owner. In this money own is at risk and personal assets is been exposed which makes
business separated over insurance of good idea. This is primary differences between sole
proprietorship and incorporated organization which is been concerned and limited liability reset
solely over business and legal entity. Further all burden is over business organization . Financing

and business credit is harder to procure:In this business entity have hard times in securing
finances over business credit upon corporation. Under an incorporated business eligible for
government funding and makes rise of funds in faire and easy manner. Under it generally reason
for incorporation over business is having legal distinction that sole proprietor does not exists. At
time funds cannot be arranged due to lack of resources. Selling is a challenge:Sole proprietors
may not want to consider the possibility of selling their business. Since these organization are not
legally monitored which makes difficulty in its selling as they cannot be considered as liable
business entity to run in near future. If an business organization has significant profit over sales
makes business attain capital gains. In this tax over gains over making purchase or starting
business to date of sale and makes total gains increased(Salbu, 2018). Also at times it become
very difficult to sell as its documentation is also not done so it is not register in proper manner.
Partnership firm: Such organization is been formed which has been helping in making
individual come together with common motive over earning profit. Under it element is based
over those businesses which has been formed in order to make risks, costs, benefits and
responsibility of running business in more effective way. Further these organizations is been
formed upon helping individuals run there business as one. Such organization are required to be
formed through analysing various kinds of risks, costs, benefits and responsibility over running
organization(Schmitthoff, 2020). The process of registration is based upon INHRC number and
partnership agreement is been formed upon making business run in more effective manner.
These business lacks ownership and suffer from certain limitations which have limited resources,
limited skills and unlimited liability. Over expansion of such businesses there is more
requirement of capital with management skills and risk assessment skills which helps in making
such organizations earn lot of profit. In partnership form of business ownership is required over
creating limitation upon limited resources, limited skill and unlimited liability. In other words it
can be said that partnership is that kind of business organizations within which persons or
individual come together over forming an organization through pooling capital and skills in more
organized manner. This is another easiest form of business to be set up. Further it can be
understood from the above explanation that partnership is considered as formal agreement within
which two or more parties is involved over business functioning. They share all responsibility
regarding profit and loss among themselves. In this various kinds of partners are included which
are silent in nature and performs day to day operations(Nkoane, 2021). such partners holds only

limited liability regarding partnership business. Though profits and loss is been shared by them
also. There are certain key points marked from the over view and definition of partnership which
are partnership is an agreement formed between two parties or individual in order to earn profit
and revenue out of it. As per general partnership all kinds of loss and profit accrued from
business is been shared by the partners. In limited liability they are liable upon certain limit upon
profits and loss taken place within an organization. In general partnership all parties shares legal
and financial liability is equal this means that all kinds of profits and loss is been shared in equal
manner. Limited partnership is an hybrid form of general partnership and limited partnership. In
this at least one partners should be general and must fulfil personal liability over partnership
debts. Further in this kind of partnership there should be silent partners whose liability is limited
over amount that is been invested(Kahn, 2017). This silent partner generally does not participate
in the management or day-to-day operation of the partnership. There are certain advantages and
disadvantages of these kinds of business organizations which are: One of the main advantage of
partnership is that it lacks formality and compare managing of limited company. Under it
accounting process has been simpler over making limited organizations. Under partnership
business does not required to pay Corporation Tax Return and has to only maintain records over
income and expenses. In this partnership tax return is to maintained through records of finances
and is to be submitted to HMRC. It is required to file there own self assessment submitted
together as partnership tax return. Further the accounting process is simpler for partnership then
of limited companies. Easy to start in this partners is required to agree over creating partnership
verbally or in writing. Registration is not required to be done of these business organizations.
Partners requires to make self assessment over tax and registration can be done individually.
Such organizations makes business expansion possible with more effectiveness as in this more
than two persons are involve and they are free from any kind of legal work related to agreement
formation. Partnership firm is based upon making work done in more effective way. Sharing of
burden since lot of partners are involved within it burden of various aspects of business is been
shared which makes such firms operate in smoothly. Also in this partners together handle all
situations related to business. Since partners work together which makes business run smoothly.
Disadvantages of partnership are business has no independent legal status which means that legal
existence is distinct from partners and within this partnership agreement is based over
alternative provisions which is put in place over dissolving registration over death of partner or

any one of the partners. In this possibility is been caused insecurity and instability which makes
developing business and is been preferred over outcome of partners remained. Unlimited
liability in this partnership business does not have separate legal personality and partners hold all
the liabilities upon debts and losses which has been incurred over losses. If business is required
to run into trouble the personal assets can be used to recover debts of the business if business is
limited company. Slow decision making in this decision making is slow as all partners are
required to agree over particular idea that is been presented by one partner to another. Limited
Resources the limit that more than twenty cannot be member of partnership form of business
organisation, limits the amount of capital that can be raised. Actually, in order to secure harmony
amongst the members of the firm, the number has to be kept much smaller than allowed by the
law. This further limits the resources with the result that the large scale business cannot be run by
partnership form of organisation(Edelson, Senk and Stock, 2018).
Incorporated organization: These are the organizations that has been formed over
making complex process formation achieved which results in making very complex process
involved over making an organization of such kind formed. Such organizations are legally
formed organizations that are corporate entity or company. In this corporation has been resulting
over making separate legal entity over different assets of firm and its income from both owner
and investors. In this corporations can be created over making countries in the world identified
through terms like "Inc." or "Limited (Ltd.)" in their names. In this legal declaration over
corporate entity is separate from its owners. Incorporation is the process by which an business is
been formally organized and brought into existence. Further the process is been used for writing
of documents which are known as articles of incorporation and makes enumeration of firm's
shareholders. In a corporation assets and cash flow within business entity required to be
separated form its owners due to investors limited liability. Such organization requires over
forming "articles of incorporation," within which primary purpose of business is been
mentioned. Also they should form "articles of incorporation," that makes main motive of
business specified regarding shares and stocks to be issued. In this small organizations is hold by
single owner and often publicly traded over several thousand of shareholders. Further these
organizations have complex process within its formation(Christophorou and Darling, 2017). The
organization included within it are public and private organizations. Private organization: The
organizations is been formed with the help of directors and shares of these organizations is not

been sold within public. The formation process of these organizations are complex in nature and
includes various documents like article of association and memorandum of association which has
to be formed. Also in this all kinds of other documents is been collected which is to be submitted
to Companies House and makes registration over an organization done. This is time taking an
lengthy process and also the organization has to follow rules and regulations regarding it. Under
it certain advantages and disadvantages are there which has been explained as in this risk of
personal assets is limited in nature and it uses Pvt. Ltd. Co. in the end of its name. Since these
organizations are considered as separate legal entity which makes business separate from its
owners. This makes limited liability of members by making shares of company only transferable
to its members in order to serve interests of business. These organizations allows individual to
bring legal action in the name of the organization that makes it separate legal entity. Also these
organizations handles ‘perpetual succession’ which is been continued over existence upon
making legal dissolvent possible(Buchheit and et. al., 2019). In private entity minimum member
cannot be more than hundred and capital required is Rs. 1,00,000 but not compulsion is there
over capital required. Disadvantages of a Private Limited Company this is one of the major
dis advantage which has been restricting transfer of ability which makes shares over articles and
in this members cannot exceed 200 members. Other disadvantage is that it cannot issue
prospectus to public and stock exchanged shares cannot be quoted. Public organization: They
are those kind of organization which has Public Limited in its end and can sell or share
debentures to general public. In this different aspects is covered that is based over making
organization stable in nature. In this digital signature of all owners, members of memorandum of
association and other importation documents of required to be collected. Public limited
companies are also required to have at least two directors and a company secretary. There are
certain advantages of these organizations explained as Autonomy: public corporations are
autonomy set up which makes both independence and flexibility involved within its operations.
In this initiative is taken over taping opportunities and improving efficiency. Protection of
public interest: in this public corporations is been formulated through implied policies that
makes promotion of public welfare done. In this policies over corporation is subject to
ministerial review and parliamentary scrutiny, thus it ensures that public interest is been
protected. Disadvantages of these organizations explained as Political interference: public
corporations are state enterprises which makes interfacer of government within its functioning.

They have been suffering from continuation of political interference and is required over acting
accordingly. This make corruption and other problem arise which directly impacts economy of a
country. Misuse of power: it enjoys immunity from parliamentary inquiry and can at times lead
over misusing of power and authorities to fulfil personal interest. It also leads over making scam
take place within country(Asri and Tuteja, 2021).
CONCLUSION
From the above discussion it can be concluded that business laws are the laws that is been
used in order to makes business organizations formed in legal manner. These laws makes various
kinds of rules and regulation formed through which goals and objectives of an organization is
achieved. In this essay two kinds of business organization is been covered that is unincorporated
and incorporated. Under unincorporated organizations sole proprietorship and partnership is been
covered. These organizations have very simple process in its formation which makes new
business organization set within market. Incorporated organization includes private and public
organizations that is been handles by shareholders. Also these organizations advantages and
disadvantages is been discussed.
REFRENCES
Books and Journals
Asri, A. and Tuteja, K., 2021. Foreign Investment Regimes in Vlying Times. BUSINESS LAW
INTERNATIONAL, 22(1).
Buchheit, L.C and et. al., 2019. 2018 Oxford Business Law Blog Round-Up: Top 20 Most Read
Posts

Christophorou, P. and Darling, T., 2017. Month-In-Brief. Business Law Today.
Edelson, S.A., Senk, C.C. and Stock, K.L., 2018. Using an integrated business experience to
take the place of “introduction to management” in an integrated curriculum. Journal of
Education for Business, 93(7), pp.332-340.
Kahn, R.A., 2017. Economic espionage in 2017 and beyond: 10 shocking ways they are stealing
your intellectual property and corporate mojo. Business Law Today, pp.1-5.
Maican, O.H., Antitrust Law in the United States of America. In Diversity and
Interdisciplinarity in Business Law (pp. 81-87). Societatea de Stiinte Juridice si
Administrative.
Nkoane, P., 2021. South African Business Rescue: Evaluating the Efficacy of Alterations of
Creditors' Contractual Agreements. BUSINESS LAW INTERNATIONAL, 22(2).
Salbu, S.R., 2018. Mitigating the Harshness of FCPA Enforcement Through a Qualifying Good‐
Faith Compliance Defense. American Business Law Journal, 55(3), pp.475-535.
Schmitthoff, C.M., 2020. International business law: a new law merchant. In Current Law and
Social Problems, II (pp. 129-153). University of Toronto Press.
van Tulder, R., Verbeke, A. and Piscitello, L., 2018. Introduction: international business in the
information and digital age–an overview of themes and challenges. International
Business in the Information and Digital Age.
Yastrebov, V.V., 2019. Protection of Appropriate (Business) Reputation of a Legal Entity in the
Law of the Russian Federation and the United States. Legal Concept= Pravovaya
Paradigma, 18(2).

REFERENCES
Books and Journals