Key Sources of Laws for Business Organizations in the UK

This report describes the key sources of laws as the legal context for business organizations in the UK. It covers various types of business models, their advantages and disadvantages, chief's purpose in the organization, their lawful responsibilities and suggestion to Sam for reasonable type or suggestion.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
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Introduction
Business connects with itself in different exercises as a sort of organization or
expert element by leading specialized or undertaking exercises. They significantly
work for acquiring benefit. These sorts of expert institutions can continue on a limited
space or as a kind of huge organization. They can go from a single broker,
enterprise to international organizations (Slorach and Ellis, 2021). A few times their
activities depend on creation and distributing of merchandise by selling them that’s
the reason that they need a scope of systems to carry out their objectives. These
organizations are additionally limited by different obligations which are made
because of the legitimate commitments put on them by the act which control them.
They all work with plans and approaches by a solitary individual or by a few people
in order to extend their organization time to time. These assist in producing benefits
and income for its proprietors and investors simultaneously by development among
the rivals. Business regulation is a kind of regulation which oversees the
organizations with additionally detailed arrangements on the most proficient method
to shape a business and how to work for longer time. This following report is going to
cover the about the various kind of business models, their advantages and
disadvantages, chief's purpose in the organization, their lawful responsibilities and
suggestion to Sam for reasonable type or suggestion.
Businesses & Organisations in the UK
Business organizations in UK act as per the Companies Act of 2006. They likewise
need to work with the employment law regulations so that their workers don't bear
the consequences. They subsequently have a different identity which is known as
artificial person. Their nature is similar to an organization they have a separate
entity, continual exitance, separate legal entity, common seal and the legal
obligations to sue or to be sued by others. Deals of organizations in United Kingdom
incorporates authority and non-revelation arrangements, liabilities and assets in
order to contract and buy, address of intent and so on. The organizations are
likewise limited by the vicarious liabilities which demonstrates that the business will
be expected to take responsibility and answerable for any wrong act submitted by its
worker against some other individual (Cantley and et.al., 2021). The business can
likewise to be expected to take responsibility for business carelessness assuming it
neglects to play out its liabilities as per the norms that have been recommended for
the obligation’s execution(Yeoh, 2019). The managerial being the individual
answerable for the appropriate control of the business has a bunch of jobs to attain
with commitments inferred on its position which makes liabile. It is very important for
them to take significant choices and decisions while acting inside the powers allotted
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to its job, they need to pursue making the organization fruitful while resolving clashes
in it. In the event that the director does the breach of the obligations, then director
responsible by different chiefs or by investors. He shall be responsible for make up
for the loss which the organization bear as a result of action which is done by him,
his agreement can likewise be ended, he can likewise be terminated from the post,
criminal of fence can likewise be made against him for violating, and he can likewise
be requested to return the possessions to the organization which he hold (Sinaga,
2021). The organization can be ended by the Partnership act 1890. For the working
of any organization both Memorandum of Association (MOA) and Articles of
Association (AOA) are significant. The two of them oversee how the organization is
made and incorporated. The MOA is a legal document which is sealed at the time of
development of an organization by investors or any underwriters whoever is involved
though AOA is a composed assertion of the relative multitude of norms and
guidelines by which the organization will be worked which are operated by the
director and investors of the organization(Aguda, 2018).
The legal business structure of UK companies
Sam works his organization of IOM solutions for last eight years where he functions
as a exclusive dealer on his own where he runs it single handedly and can be
expected to take responsibility for whatever commitments his business face. He is
the sole trader he doesn't have to share benefits. Presently he needs to extend his
business of offering electrical parts and needs to procure the profits because of
expansion in his clients and the requests made by them. He has different choices
accessible for an appropriate business type and is searching for proposals on the
equivalent. They are as follows:
Sole Trader
Sole traders are a term used to describe self-employed people. This is the
most basic business structure, and it is the easiest to start, establish, run, and
operate. Because of his singular presence in the company, he is the sole beneficiary
of the earnings made by the company (Klumpes and et.al., 2021). As the only owner
and head of the company, he is responsible for all liabilities that arise. As a result,
due to the control of ownership in a single hand, this kind is particularly popular
among enterprises in the United Kingdom. They are cost effective in their
establishment because their setup is so easy. A few of the benefits of a sole
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proprietorship include the ability to keep all profits, maximum privacy, and ease of
operation and establishment compared to other options. Disadvantages include
having to shoulder all debts and liabilities on one's own, finding it difficult or
impossible to take vacations, and having to meet all business-related day-to-day
responsibilities(Aldahmash, 2021).
This type also has drawbacks due to the fact that all of the material and
equipment expenditures are borne by a single person. This category of risk also
includes banking and financial concerns. This sort of business has the following legal
implications (Atmadja and Wiryani, 2021). The proprietors of this type of business will
be required to pay income tax and corporation tax on all of their business revenue
from time to time. They must comply with the General Data Protection Regulations
and register with it in order to retain the record of their clients' data. If someone does
not follow the rules, they will be subjected to sanctions. They are also obligated by
law to participate in national interest. They must also prevent any lawfull ramifications
by timely paying self-assessment tax returns(Machin and Wilkinson, 2021).
General Partnership
As per this case, more than two persons form a firm in conjunction with one
another in order to obtain some benefits. This is one of the most popular types of
business establishment, with multiple people entrusted. In addition, the number of
people involved in major decision-making are labeled as organization and functions
as co-owners of the company(Wojewnik-Filipkowska and Węgrzyn, 2019) .. There are
various types of partnerships, but general partnership are thought to be the most
common. Therefore, when it comes to forming this type of partnership, it is
considerably easier than others and is thought to be the least expensive. In this
case, all of the declared members are held equally liable for the managerial actions,
including both expenses and earnings. Furthermore, all partner is equally obligated
to contribute labour, expertise, capital, and income to the company. Moreover, with
other types of partnerships, it has more benefits than drawbacks, the most notable of
which is that the share of earnings comes directly to the partners, who share an
equal amount of obligation. When it comes to the legal ramifications of this
arrangement, the laws state that partnership firms are not considered different legal
entities from their owners (ОДЕМАР, 2021). This means that both the owner and the
company have their own legal status. As a result, rather of paying taxes on the entire
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amount of money earned as a result of the partners' collaboration, each partner must
pay taxes on their portion of the income.
Partnership
The partnership is an arrangement between two or more people who agree to share
the company's revenues and expenses. A partnership firm must have the following
three aspects in order to be formed: there must be an agreement among the
partners, and the agreement must be reached with regard to the sharing of created
profits. The company can also be administered by all of the members together, or by
any one of them on behalf of others. Furthermore, there are numerous benefits as
well as drawbacks to this type of organization, with benefits including the fact that it
empowers a broad scope for business because it comprises a large number of
partners. This can also be a disadvantage because, as a result of the vast circle,
partners tend to lose direct and full control over the business (Allen, Kraakman and
Khanna, 2021). Further, in order to start a firm, it is necessary to have willing affiliate
partners. A partnership document, which governs all aspects of the firm, including
the distribution of earnings, is also a requirement. It can be written or spoken in both
written and oral forms.
Limited Liability
In this type of business, each member's liability is limited to the number of shares he
bought. It is a sort of business model that is typically used by small measure
enterprises and whose shares are not publicly transfer (De Luca, 2021). Benefits
included the fact that the company and its owners are treated as independent legal
entities, that there is no minimum capital required to start a corporation, and that
business owners have limited responsibility(Muhammad, 2018). The number of
needed shareholders should not exceed 50, and another important disadvantage is
that the prospectus cannot be distributed to the general public. Also, both the
partners and the firm have the legal status of a separate legal entity, thus even if the
company is fully liable, the partners' responsibilities are restricted to the amount of
share each contributed. Unless there is a case of deceitful on the side of the partner,
the partners are stated to be personally accountable for any debts owed to the
company. Similarly, because there is no idea of shared liability in a limited liability
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company, no partner can be held accountable for the negligence or fraud of
another(Mulholland and Turner, 2018).
Recommendations for IOM Solutions
After gaining a full understanding of the many forms available for starting or
expanding a business, Sam has determined that the limited liability partnership is the
best option for him. As it is stated, he wishes to expand his current firm, IOM
solutions, and while receiving numerous possibilities, he is still lagging behind due to
insufficient management as the sole person in charge of the company's
affairs(Hardman, 2022) . Also, because Sam is searching for a solid business
alternative as he expands his, this option will be a good fit for him.
Conclusion
According to the above study, the Companies Act of 2006 is very essential in
relation to companies and its management, encompassing certain important detail
such as the process of their commencement , the obligations of their members, and
their profit holding. Furthermore, the paper addresses the many types of businesses
that are available to anyone who wants to start a new business or expand an existing
one, as well as all of their legal implications, benefits, and drawbacks. It is also found
that the best option accessible to Sam in order to expand his IOM solutions firm is to
form a limited liability partnership.
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REFERENCES
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De Luca, N., 2021. European company law. Cambridge University Press.
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Wojewnik-Filipkowska, A. and Węgrzyn, J., 2019. Understanding of public–private
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