Business Law and Different Types of Business Organizations: A Case Study of IOM Solutions Ltd

Individual Report
INTRODUCTION
Business law is a regulatory body that governs the business corporations in order to
ensure smooth functioning of the business operations . It is a set of rules and regulations which
are obligatory on the part of every business organisation. It encompasses all the legislations that
administer the formation of the business and how to run the business. It is also known as
mercantile law or commercial law. It also supervise Trading activities , buying and selling of
goods and services. The business law also manages the dealings between the individuals in
commercial relations. Every person who is engaged in the reciprocation of business related
Activities must acknowledge the said rules which are being laid down by the law to ensure fair
and transparency In the business. This Report covers the study of IOM Ltd which is a company
that is engaged in selling different electrical parts to the local garages. It explains different types
of business organisation Available to IOM Limited company for the purpose of restructuring the
business. It also covers various legal outcomes of The above mentioned business organisation.
Further It discusses certain suggestions or recommendations for the business in terms of
identifying best suited business organisation for Sam.

MAIN BODY
Different types of businesses available for the reorganising the company
From last two years I OM solutions Ltd has experienced growth and development in the
market. The fast growing business led to Increase in demand of the consumers which has created
a pressure Over Sam who is a sole trader. To meet the growing demand, Sam needs to expand
the business by getting it re-organised. For restructuring the business Sam is searching for
different types of business organisations which are available for the company, IOM solution. In
present scenario the companies in the national as well as international market faces stiff
competition in order to reach to the desired level. For which it is important to choose a suitable
business type for the company so that the business could run in an efficient and effective manner.
This will help Sam to reduce the burden of work and to include more individuals in the business
so as to meet the required demand. Various types of business options available to Sam are as
follows-
Sole trader- It is a type of business which is run by a single owner which means the decisions of
the business is solely taken by the individual who is engaged in Sole trading. The existence of
the business is totally dependent upon the owner. That is there is no separate legal identity of the
business other than its owner. This type of business includes low-cost and is preferred by the
small business enterprises. The income which is earned by the owner is taxable as it is the only
or single source of financial income for the business person. Sam is engaged in this type of
business for the company IOM solution. The profit earning of the business belongs to the owner
itself and there is no regulation in this form of business. It is a flexible business type if compared
with the other forms of businesses .
Partnership- Partnership is another type of business organisation which is based on a written
agreement between two or more persons who run a firm together. The formation of this type of
business can be done by two or more people Who enter into an agreement consists of certain
conditions and rules to run the particular business enterprise. The liabilities and the profits are
clearly stated in the agreement. It is obligatory on the part of the partners to fulfil their
responsibility in in terms of sharing losses and profits of the company equally. General

partnership and limited partnership are the two forms of this type of business. General
partnership means when the partners are accountable for the losses debts and responsibilities of a
company. Whereas, Limited partnership means the partners are only allowed to make
investments and they have no additional liabilities against any losses or loan repayment and
debts. Sam can use this Corporate structure for IOM solutions because it will help them to access
more funding and share accountability. It will also assist Sam in reducing the workload with the
growth of the business.
Limited liability- It is a type of business in which the proprietor has limited liability as well as a
financial benefit. It offers a number of advantages to business owners including restricted
liability for losses and debts as well as profit sharing by avoiding the process of double taxation.
Double taxation system is a process in which the partners are taxed in the name of the company
as well as their partnership. As the name suggest itself that the liability of the Individuals is
limited. It bifurcates the partners from the obligations of the company in the name of liability.
Sam who is a sole trader Can use this type of business since it let them to segregate its personal
identity from the firm. It will also help in the effective management of the business by limiting
the liability. It enables business organisation to attract other partners who may share work
responsibilities by reducing the extra burden. It also ensures the expansion of business enterprise
in the market.
Cooperation- It is a separate legal entity that assist individuals in generating profit for the firm.
It is a structure in which a business corporation develops independently of its owners personal
liability. The individuals can enjoy various rights and responsibilities that a company posses such
as payment of taxes hiring the staff and owning the assets. It is a form of a business that is
governed by state regulations which provides a wide framework of rules and regulations like
double taxation system on the people involved in this type of business. Sam can choose this type
of business for the company IOM Ltd because it helps in restricting the liabilities of the owners.
Profit and loss of the business are associated with the company. This makes the process of
transferring the business easier In which the owner’s personal earnings As well as the assets are
not used for recovering the business debts.