Business Law Report on Legal Business Structure of UK Companies

This report examines the legal business structure of UK companies, with a focus on IOM Solutions. It covers sole trader, general partnership, partnership, and limited liability structures, and provides recommendations for IOM Solutions to expand their business.

1. BMP4002
BUSINESS LAW -
REPORT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Business and the organisation in the UK.....................................................................................3
The legal business structure of UK companies............................................................................4
Sole Trader.........................................................................................................................4
General Partnership...........................................................................................................4
Partnership.........................................................................................................................5
Limited Liability................................................................................................................6
Recommendations for IOM Solutions.........................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Business law refers to the cooperative law which consist of certain rules and regulation
formed for the business enterprises. This legal system include aspects of the business which
involves formation process of a company, unions and acquisitions, stockholders right as well as
property matters for example rental office or warehouse planetary (Clarkson and Miller, 2020) .
The present report will examine the business law of the organisation IOM solution. The report
will highlight the the legal business structure of UK companies. Furthermore, the report will
recommendation to the IOM solution company to expend the business in the marketplace in
order to generate the profitability as well as productivity.
MAIN BODY
Business and the organisation in the UK
IOM solution is the business organisation which is operated by the Sam as a sole trader. The
organisation provide electric part to local garage with the motive of acquiring profit from the
marketplace. the only owner of the organisation managing the organisation since many years.
Now the individual person determine that the gross profit of organization in the marketplace is
increasing day by day so the organisation have opportunity to expend in different market
segment to acquire the profit and enhance the productivity of the company (Corwin and Ciampi,
2020) . The organisation follow the employment law in order to provide proper facility as well
as safety to the employees of the organisation. In context to provide proper satisfaction to the
potential consumer the company also follow the consumer law which is designed for the
protection of the buyers. The organisation always take care of its customers in appropriate
manner for that the company serve the best electric quality product to the consumer. By the
analysation of the profit of the company the owner of the organisation aim to expend the market
and enhance the value of the brand among the people. Due to the issue of vicarious liability in
which the employees are not using the machinery in appropriate style which create
mismanagement in the organisation because for that the sole trader Sam is being responsible.
The company completed all the documentary work and follow all the legal system lies for the
company. Moreover, the company prepared the document at the time of registration process with
all the essential details of the institution. The organisation drafted the memorandum of
association very carefully for the welfare of the organisation. This documentation is obligatory
for the administration as it involve the scopes and operation of the organisation (Formosa,2018) .

The MOA consist of the strength and objective of the organisation beside that the AOA involves
all the rules and regulation of the company which supposed to follow by each and every member
working with the institution. The MOA has all the information associated with the organisation
for instance name of the organization, aim and objective of the company, capital as well as
liability clause.
The legal business structure of UK companies
Sole Trader
Sole trader refers to the person who manage or owned the business and operated individually. In
general, it considered as the self-employed person who have complete control over the business.
In the sole trader the owner acquire the profit alone after deduction or payment of the taxes
which is implement by the government of the nation. Along with that the person is the only liable
for all the losses of the company. The personal assets are not protected under this form of
business legal system and it required less documentary work as compared to other form of the
business structure. The sole trader is the responsible for the company’s sales, expenditures and
excise liability (Goodhart and Lastra, 2020). The advantage of being sole trader is to have total
control over the business it means the the other person not able to monitor the business on the
behalf of the only owner. It is most convenient way to become self employed person within the
marketplace. the company will get the license or the permit to operate the business by the
authority of the country or the state. the organisation can have complete privacy for instance the
the financial statemented is not highlighted on the companies house. The individual person offer
great elasticity and integrating the business. On the other hand, the organisation have less tax
planning opportunity as all the surplus the organization acquire is answerable to income tax. The
operating person is wholly liable for all the debt tat occurs in the business. Along with that the
person need to deliver the self-assessment tax return once in every year. Beside this the owner
also find difficulty in getting the capital for the enterprise through the financial institute.
General Partnership
It refers to the two or more than two investors who comes together to operate the business
jointly. Both or all the partners of the firm bring different ideas and creativity in the business as
the individual person have different source of skills and knowledge. The other partner or the

general partner has the right to take action or operate on the behalf of the business without the
authorization and acknowledgement of additional partner. For the obligation of the business the
partner may face the issue of unlimited liability (Hee, 2019) .Both the partners share the
responsibility which is related to the management and other function of the enterprises. It is
considered as the most common form of business structure as it is the most emblematic, easy as
well as more effective with the lest expenses for the enterprises. The partners are equally
responsible for the surplus as well as obligation of the business. The members of the organisation
not need to pay the separate taxes as authority do not considered as separate entity in context to
the business. It will bring more flexibility in the business and operate in unique manner.
Simultaneously with the pros this form of business also have cons for instance the partners of
the organisation do not have separate entity in the marketplace. due to which the partners are
liable for each other’s decision or the other form of action which the individual take on behalf of
enterprises. The partner may face the large preposition of the penalty in the future bifurcation.
In future general partner is ever required to encounter the partnership's financial duties, then the
personal assets may be bound by insolvency (Tantra, 2019).
Partnership
The partnership indicate the formal arrangement of two por more then two people who manage
and operate the organisation with each other. The partners are responsible to to share the gross
profit as well as liability together as per the ratio. Before involving in the partnership, the sign,
the partnership deed which is an agreement between the two or more people to share the
organisations assets with the decided ratio mentioned in deed. The ratio is decided by the
partners which show they are able to contribute the capital in the organisation. Basically, the two
people form an alliance in order to operate the business in effective as well as efficient manner.
from the taxation policy the partners acquire special or extra benefits. According to the common
law the partners are personally liable for the debt and profit of the organisation. the benefit of
being partners have the limited form of liability (Hurt, 2018.) . The advantage of this form of
business legal structure it will increase the borrowing capability for the organisation along with
that the financial institute also support in collecting fund for the organisation. It consist of limited
regulation at the workplace which make easy to work for the employees of the company. The
process of accounting process will be easy for the partnership. In the partnership the business

maintain all the record in appropriate manner. Along with that it increase the knowledge ands the
skill at workplace. The disadvantages of a business partnership is that they do not have
independent legal survival dissimilar from the partners. Sometime the partners come into the
conflicts while making decision which ruin the environment of the organization. Beside this the
employees are find difficulty in answering as they got confuse that whom the individual person
supposed to answer (Sarah and Vida, 2020).
Limited Liability
This is the most common form of legal business structure in which the partners of the
organisation is having the limited liability for the amount that is invested in the business
enterprises. The partners bifurcated the risk factor and the liabilities of the organisation. in this
form of operation if the partnership fails the creditors cannot acquire the personal assets of the
partners. It deliver the flexibility in operating the management role within the company. The
limited liability partnership avoid double taxation process. In this formation the partner supposed
to pay their own personal taxes rather than paying the duties on the others behalf. In the
registration of this partnership each partner mentioned the roles as well as responsibility,
financial involvement and debt circulation. Each member of the organisation play essential role
in the organization and deliver the best solution to the company in order to accomplish the goal
with the different skills as well as knowledge (Kubasek, et.al 2019) . The pros of LLP is in this
process the members are not suppose to bring any targeted capital as the contribution for the
organisation. Moreover, the business entity is operated by more than two partners as there is no
limit in the process of partnership. In the taxation aspects no dividend distribution is payable.
The limitation of LLP is that if the income tax return is not fill on time then penalty will pe
applied on the organisation by the authority. Furthermore, if the turnover is high then the
company will involve in higher income tax rate. The profit which is earned by the company is
not retained. Therefore, the surplus of the organisation is distributed with no flexibility to hold
over the profit for the forthcoming challenges.
Recommendations for IOM Solutions
From the above point it will be recommend to the owner of the company Sem as well as
establishment in order to expend the business. The organisation should involve another’s
members in the organisation and the individual personality cannot operate the business

individually. Therefore, the individual person have opportunity to enhance the productivity of the
business by involving another person in the business as the partner. Due to which the owner of
the company may involve in the less obligation (Rydvalova. and Skala, 2021) . The individual
person should divide the workload among the partners so that owner can operate the business
with proper management. The company should adopt the techniques or the skills and knowledge
of the partner. The company should decrease the burden of operating the management
individually. The owner of the institution should divided the share of the company with the
partner as it will be less cost effective as compared to sole trader or other form of partnership. In
order to enhance the business, the organisation should bring innovation in the business for that
the company can assess the skills, experience and knowledge. Moreover, the company should
take better decision for the employees as well as consumer which the company can do with the
help of new partners as every individual have different mind set and mentality. Furthermore, the
company should keep the information confidential with the partner.
CONCLUSION
From the above report it will be concluded that in order to expend the business in the domestic as
well as international market the individual person need to understand all the rules and regulation
formed by the government (Moll, 2020). The report highlighted the legal system of business
which the owner of the company utilized in order to expend the business and with the assistance
of that the individual person enhance the performance in effective as well as efficient manner.
furthermore, the present study also deliver the relevant solution to the organisation by which the
company can acquire or able to lead the market.

REFERENCES
Books and journals
Clarkson, K.W. and Miller, R.L., 2020. Business law: Text and cases. Cengage Learning.
Corwin, L.D. and Ciampi, A.J., 2020. Law Firm Partnership Agreements. Law Journal Press.
Fenwick, M. and Wrbka, S., 2018. International business law: emerging fields of regulation.
Bloomsbury Publishing.
Formosa, A.M., 2018. From a sole trader to a company: a legal and financial analysis (Master's
thesis, University of Malta).
Goodhart, C.A. and Lastra, R.M., 2020. Equity finance: Matching liability to power. Journal of
Financial Regulation, 6(1), pp.1-40.
Hee, L.T., 2019. Laws governing business. In Doing Business in Korea (pp. 57-79). Routledge.
Hurt, C., 2018. Partnership Lost. U. Rich. L. Rev., 53, p.491.
Kubasek, et.al 2019. Dynamic business law: The essentials (pp. 28-50). McGraw-Hill Education.
Moll, D.K., 2020. Contracting out of a Partnership. Transactions: Tenn. J. Bus. L., 22, p.239.
Rydvalova, P. and Skala, M., 2021. Innovation and innovation partnership. In Innovation and
Performance Drivers of Business Clusters (pp. 47-57). Springer, Cham.
Sarah, R. and Vida, A., 2020. Business law. Pearson.
Tantra, R., 2019. Self-Employment. In A Survival Guide for Research Scientists (pp. 215-224).
Springer, Cham.
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