Types of Business Organisation and Legal Consequences for IOM Electronics

This report discusses the different types of business organisations available for IOM solution for reorganisation, including sole trader, partnership, cooperation, and limited liability. It also explains the legal consequences of each business entity and provides a recommendation for IOM electronics to select partnership as the appropriate business type.

Business Law

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................2
Explanation of different types of business organisation available to IOM solution for
reorganising.................................................................................................................................2
Legal consequences of each business entity................................................................................3
Recommendation for IOM electronics for selecting appropriate business..................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business law refers to body of law which can be govern by organisation and commerce and
it often considered to be branch of civil laws and also deals with issues of private laws as well as
public law. It regulates hiring practices of business, corporate contracts, sales and manufacturing
of consumer goods (Haggard and Haggard, 2018). There are different types of company adopt
commercial laws in business. This project report includes study of IOM limited that is selling
various electrical parts to different local garages. This business can be run by sole trader Sam
which is running this business over eight years. This business is getting growth in market from
last two years and it is difficult for Sam to operate business under pressure. This report includes
explanation of different types of business organisation available for IOM solution for
reorganisation. It also consists legal consequences of different types of organisation. Moreover, it
consists recommendation for business in order to identify suitable organisation for Sam.
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MAIN BODY
Explanation of different types of business organisation available to IOM solution for
reorganising.
IOM solution is getting growth in market from last two years which create more pressure
over Sam who is a sole trader. In order to meet this demand and growth in market. Company can
adopt different options available in market which allow them to manage business and also to
expand it (Schmidt, Drews and Schirmer, 2018). In the era of stiff competition between
companies, it is essential to focus on selecting most appropriate type of business. In order to
increase the efficiency and effectiveness of a business it is important to select best type of
business approach. All major companies in the international and national marketplace should
focus on developing key approach in selecting most suitable type of business. It will help Same
to reduce pressure of work from them and allow them to includes more people in business in
order to meet market demand. Some of these options available to IOM solution are mentioned
below:
Sole trader: It is one of form of business in which business can be run and owned by a single
owner for different purpose. In this, existence of business can be depended on decision of owner
and there is no existence of business in absence of owner (Kaplan, 2018). There is no legal
identify of business other than their owner that is suitable for business when it has single owner.
It can be adopted by small business as it consists lower initial cost. In this, income generated by
owner is taxed once as it is a personal source of income of a person. Sam has adopted this form
of business for their organisation IOM solution. It allows them to get all profit of business by
themselves and also there is less regulation in this business. It provides proper flexibility to
owner for running of business.
Partnership: It is another form of business organisation based on formal agreement among two
or more people who run business together. It can be form by two or more individuals and
business. In this, there is clear stated authority, liabilities and profit in business. All partners
share responsibilities and benefits and choice of partner create impact over operation of
company. There are basically two types of partnership including general partnership and limited
partnership (Kolk, Rivera-Santos and Rufín, 2018). General partnership is one in which all
partners are liable for potential loss of company, its debt as well as obligations. Limited
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partnership on the other hand is one in which there are some partner who are limited to be a
investor and does not have any liability. Limited partnership has mainly two types of partners
including general partner and limited partners. Sam can adopt this form of business organisation
for IOM solutions as it allows them to benefit of more funds, shared responsibility. It helps Sam
to reduce their work burden of business due to increased growth of business.
Limited liability: It is a form of business in which owner has limited liability and also has
income advantage. It provides various benefits for owner as it allows them to have limited
liability for loss and debt and profit of business will share by owner without double taxation. It
separate owner from liability of company and can be taxed as corporation as well as partnership
(Chell, Hedberg-Jalonen and Miettinen, 2019). Sam a sole trader of IOM solution can adopt this
form of business as it allows them to separate its identify from business. It will help them to
manage business in effective manner and also limiting its liability. It allows business to get more
partners for business who can share responsibility of work that reduce work burden and also
provide opportunity to business to expand it in market successfully. It also allows company to
get more funds and also resources.
Cooperation: It can be described as separate entity and also legal person as it helps them to
generate profit for business. It is a form in which company develop its business separate from
their personal liability from company (Bouncken, Qiu and Clauss, 2020). In this, corporation has
different rights and responsibility which can be enjoyed by individual like owning assets, paying
taxes and hiring employees. It is a business which consist state regulation that impose broad
structure as well as taxation for both business as well as personal revenue. It is a form of
business that can be adopted by Sam for IOM solution as it helps them to limits liability of
owner. In this profit and loss of business can be belongs from cooperation. In this, transfer to
business to new owner it easy and personal assets of owner is not liable for payment of debt of
business.
Legal consequences of each business entity
The legal business structure and consequences of different types of business organisations
includes law and its related dimensions. It is one of the major roles of management of a company
to determine all the major legal consequences of establishing a business entity. In the United
Kingdom, there are major two kinds of business organisations which are unincorporated and
incorporated (Morabito, 2018). The Unincorporated companies are those businesses which has
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less interference of government. The unincorporated business companies include key
organisations which are formed without any legal formalities. It is major responsibility of an
unincorporated business to follow all rules and regulations developed by government in order to
lead the marketplace. The main organisations which come under this category are generally sole
proprietor and partnership. It is one of the major role of a business to consider effective ways of
developing crucial approach which is beneficial in formation of a legal structure. The
unincorporated business organisations include very easy formation and less legal formalities. The
Public and private organisations are covered under unincorporated businesses. Private
organisation These organisations include Private limited at their end and its shares are not given
to public. The private organisations also include minimum or very less interference of the
government in order to develop effective edge. Organisations has been managed by different
directors themselves and debentures are key sources to arrange funds. In the recent times, many
different individuals are focusing on development of private type of business to perform different
types of legal operations.
Public organisation- The public companies are those which put public limited ahead of its
name. In the recent times, public organisations are formed and their shares are sold to the
citizens. In United Kingdom there are many public limited companies which are run by
government with full swing. In the formation of a public limited company, there is a requirement
of two directors or more within the company secretariat. The documents required to form public
companies include memorandum of association, article of association and digital signature of the
owner as well (Favarel-Garrigues, 2020). The management of the business in public
organisations is complex and involves more functions as compared to public organisations. The
funds related to public organisations are provided by institutions of government, consolidated
funds, public taxes and many more. The public organisations are also considered as key
organisations which contributes to employment, gross domestic product and national income.
Sole Trader-The sole trader is considered as a business which is started and managed by a single
person. There is a less involvement of government and other legal formalities related to the
business. All legal and ethical responsibility of doing business is in the hands of a single owner
in the case of sole trader business. This is one of the major role of a sole trader to use INHRC
number in order to make registration for the business. In this type of business, funds are arranged
by family members and friends of a person. This is one of the major role of a business to focus
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on key parameters of development of legal structure and approach in a business organisation.
Major companies at the marketplace focus on building flexible legal structure in order to
facilitate all major operations in a legal manner. The key role of a business should be to develop
a major approach which is beneficial for increasing employee participation. Sole trader business
is considered as key type of business which helps in improving strength of the economy as well.
Partnership- The legal formalities in partnership are more as there is an involvement of
partnership agreement between two or more people. The business organisations at the
marketplace in partnership should develop a flexible legal structure which is easy to understand.
In the development of a company, legal structure plays an important role in deciding major
advantage for a business welfare and development (Fitzpatrick, 2020). The legal claim made by
partners in this type of business also includes key legal formalities which are associated with
development of a business
Recommendation for IOM electronics for selecting appropriate business
It is recommended for IOM electronics to select partnership as a major way of doing the
business. The IOM electronics should select IOM partnership as it is one of the finest way of
doing the business. In the partnership there is a risk sharing approach which helps in eliminating
risk associated with operations. Many successful international and national companies at the
marketplace focus on doing business as per partnership deed to develop sharing of risk and loss.
IOM electronics should perform operations based on partnership in order to develop efficient and
effectiveness in key functions. IOM can take into consideration partnership as a way of doing
business in order to comply with legal rules and regulations (Young, 2019). This is one of the
major role of a business to consider risk free development with the help of different risk
minimisation techniques. The different companies in the marketplace should focus on increasing
their strength and capabilities with support of legal and ethical approaches.
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CONCLUSION
From above mentioned project report, it can be concluded that business laws are one of
important laws for business as it set a limit for business. There are different types of laws in
different countries which is to be followed by business. There are different types of business
forms that a business can be adopt as per their requirement and situations. These forms include
sole trader, partnership, cooperation, limited liability and others. All these business form has
their own advantage and disadvantage and also legal consequences. There are different types of
laws and legislation for business which is to be followed by them in order to avoid interference
of legal authority.
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REFERENCES
Books and Journals:
Chell, E., Hedberg-Jalonen, N. and Miettinen, A., 2019. Are types of business owner-managers
universal? A cross country study of the UK, New Zealand and Finland.
In Entrepreneurship and SME research: on its way to the next millennium (pp. 3-18).
Routledge.
Schmidt, J., Drews, P. and Schirmer, I., 2018. Charting the emerging business ecosystem of
fintechs and banks: Seven types of collaborative business models.
Kolk, A., Rivera-Santos, M. and Rufín, C., 2018. Multinationals, international business, and
poverty: A cross-disciplinary research overview and conceptual framework. Journal of
International Business Policy, 1(1), pp.92-115.
Bouncken, R.B., Qiu, Y. and Clauss, T., 2020. Coworking-Space Business Models: Micro-
Ecosystems and Platforms—Insights from China. International Journal of Innovation
and Technology Management, 17(06), p.2050044.
Kaplan, A., 2018. A school is “a building that has four walls… with tomorrow inside”: Toward
the reinvention of the business school. Business Horizons, 61(4), pp.599-608.
Haggard, D.L. and Haggard, K.S., 2018. The impact of law, religion, and culture on the ease of
starting a business. International Journal of Organization Theory & Behavior.
Morabito, V., 2018. Lessons from Australia on class action reform in New Zealand. New
Zealand Business Law Quarterly, 24(3), pp.178-211.
Favarel-Garrigues, G., 2020. Digital vigilantism and anti-paedophile activism in Russia.
Between civic involvement in law enforcement, moral policing and business
venture. Global Crime, 21(3-4), pp.306-326.
Fitzpatrick, B.T., 2020. Can the Class Action Be Made Business Friendly?.
Young, C., 2019. Putting the law in its place: Business ethics and the assumption that illegal
implies unethical. Journal of business ethics, 160(1), pp.35-51.
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