Nature, formation, and management of Business Organisations

This report discusses the nature, formation, and management of business organizations, including the legal business structure of UK companies such as sole trader, general partnership, limited liability partnership, and limited liability company. It also provides recommendations for IOM solutions. The report emphasizes the importance of a healthy working culture and environment in the company and proper management within the company to ensure effective business operation.

Business Law
Title:
Nature, formation,
and management
of Business
Organisations

Table of Content
Introduction..............................................................................................................3
Business and Organisation in UK..........................................................................................3
The legal business structure of UK companies.........................................................4
Sole trader.........................................................................................................................4
General partnership.........................................................................................5
Limited Liability Partnership..........................................................................5
Limited Liability Company.............................................................................5
Recommendation for IOM solution...........................................................................6
Conclusion.................................................................................................................6
References..................................................................................................................7

Introduction:
A business is a start-up by an individual or group of people having similar motive and area
of interest. It becomes a source of income for the owners of the company and even the employees in
it, by providing services, selling raw materials and may be even by producing goods in the market.
The creator of the business desires to be known and have number of clients for the business in the
society and have competitions which will boost the employees in the company to work even more
harder for achieving the targeted goals. A business can engage in different types of activities such as
commercial, industrial or professional. (Liu,.,2020)A business is registered as a small, mid scale and
large scale business. The business law helps in understanding the working and the operation
process of any new business. In this report it is stated the different organisation and businesses in
the United Kingdom along with the legal structure for the business. And will provide
recommendation to Sam for IOM solution.
Business and Organisations in United Kingdom:
A business works and operates according to the Companies Act,2006 which provides all the
rules and regulations regarding the operation of the business and even makes the owner of the
business aware about the guidelines to be followed while operating in the business. The regulations
mentioned in the act helps in running of the services without any faults and misunderstanding
within the operation of the services provided in the business. A business cannot operate without the
employees,they play the most important role in the operation of the business. Therefore the code
and conduct shall be according to the act for the employees and this will not cause any trouble for
the employees and while as the employer.(Dowd,2022. )There shall be a healthy and comfortable
working environment in the organisation so that the working of the culture of the company is
suitable for the members providing their services to the organisation. The company should operate
as per the rules and regulations mentioned in the act as to not get in any kind of legal obligations
and come in the notice of the government authorities regarding their working conditions as per the
act. The business has to registered themselves under the act to have a personal identity for their
business and get an identity for which they will be independently liable for any legal liabilities.
Before starting a business lot of agreements are signed by the owners of the business to make the
business legal and be known in the market and people get aware about the business. There are
concepts that are perpetual existence, separate or distinct properties, a common stamp or seal in the
name of the business and will get authorized to fill a case on any other business in the market which
are causing trouble for them while operating in the market. The business after getting registered

under the act becomes responsible for various matters which will affect the position of the business
in the market .
The unprofessional behaviour in the business of the employees effect the business operation
and can even rise a lot of issues which are legal liabilities, there are various types of liabilities and
vicarious liability is one type of them it mostly arises in the large scale business that operate with
large number of employees working in the business. These liabilities occur only at time misconduct
by the employees of the business or by the providing wrong services as promised by the service
provider.(Ho,. 2021.)There can be an issue in the operation of the business if there has been
dishonestly with the clients and the business is not able to deliver all the promised services, the
name of the business will come at risk and will effect the reputation of the business within the
market. The positioning and giving roles to the employees within the organisation is done by the
Director of the business, even they assign the duties and responsibilities to the employees in the
business. The director is to keep the whole organisation or company free from the legal obligations
and liabilities. Any kind of unethical behaviour by the director which leads to breach of duties and
can lead to detention from the post of the director.
The Partnership Act of 1890 focuses on the provisions which describe the agreement of
partnership that states the formation of the company and the procedure of operation within the
business and even the process of termination of the partnership that can happen due to malpractices.
There are effective management of the business which can take place with the guidelines of
Memorandum of Association (MOA) and Articles of Association (AOA). MOA is a type of legal
statement which helps to manage the formation of the company at the time of its incorporation but
is only implemented after it gets signed by the shareholders and guarantors.
(Ramsay,.2018.)Whereas an AOA is a type of written statement which is defines the rules and
regulations of the company which should be abided by them while working in the company. Thus it
requires the consent of directors, shareholders and owners before its implementation in the
company.
The legal business structure of UK companies:
Sam's business of IOM solution is a type of sole trade also referred as Sole proprietorship business
structure. The business is in market operating since last 8 years and from the last 2 years the
business has grown as compared to the other years growth. Sam is the only owner of the business
due to which all the liabilities and risks fall in his bucket and has to face all the drawbacks by
himself. He is thinking of expanding his business in the market and for which he searching for new
business structures, the different structures are:
1. Sole trader: It is a self employment type of business structure which is managed by a sole
person in his capability. This structure offers the benefit with respect to its establishment

which is cost friendly. Thus, it is easier to open, operate and run. It is a very popular form of
business type among the young and emerging entrepreneurs who develop and establish their
business on a small scale. They do so due to the availability of low capital and funds with
them. The decision are taken independently without any problem of judgements. The
ownership control provided with this type attracts the new business people. But it has
demerits with respect to the debts, liabilities and losses which the sole person has to bear
while managing their business. But it has private management with respect to
confidentiality. But getting personal and family time out of the business is often difficult.
Income and corporation tax has to be paid by the owner and they should maintain data of
their customers with respect to the General Data Protection Regulations
2. General Partnership:This type of partnership involves two or more people working as
generic drug partners with whom you have a partnership agreement. These partners operate
their business by sharing all the roles and responsibilities associated with their business.
They must share profits and losses equally in a timely manner while operating their
business. The Articles of Incorporation provide for partners to share the costs of
incorporation, financial risks and debts, and the benefits arising from the company. As a
result of the agreement, they must be jointly involved in business operations and share
responsibility for risk management and accountability for the actions they take. This gives
you unlimited personal liability. (Tapia-Meza,et.al., 2022. )However, this structure is more
reliable than the sole proprietor because it is a simple investment in the business. Also,
because of their different skills and experience, they make creative decisions that help
improve the productivity of the company. However, partners face difficulties when they are
punished for the torts of other partners and are jointly and severally liable. This is regulated
by the Partnership Act, which regulates the establishment and dissolution of a company if
one of its partners dies or goes bankrupt.
3. Limited Liability Partnership: The partnership offers less number of liabilities when it is
compared to general partnership. There is a different creation of obligations with respect
when limitation is on the amount of money that is spent by the business partner. Business is
incorporated by more than two partner which are personally liable for over all actions taken
during the business. But joint liabilities or collective is not in there hand. But for this
partnership registration officially is compulsory, which will be in accordance to the
regulations of government. The limited partnership Act 1907 which is governed an LLP is
protecting the partners interest. It has created the written agreement which helps to
functioning effectively in the business.(Parkinson,., 2018.)
4. Limited Liability Company: It is also regarded as a private limited company whose

management is governed by the Companies act 2006 which provides details of the limited
liabilities. It lays down provisions determining how a company is formed and operated, what
is required to form a private company and how it can be dissolved. It also created legal
obligations with respect to the rights and duties of the heads and members of the company
who must abide by the constitution of the company. Director is usually the head of the
company who runs the management of the company. The company is owned by the
shareholders. It has a distinct corporate identity. Owners in this enjoy minimum personal
liabilities.(Shardlow,., 2020.)
Recommendations for IOM Solutions:
When a business grows and develops it requires timely expansion so that it can take
advantage of the growing opportunities in the market. It also helps the business to adapt with the
dynamic circumstances. Thus, Sam must choose limited liability company for the expansion of his
business of IOM Solutions.(Thomson,., 2022.) This legal structures offers a range of benefits. It
helps to share the responsibilities of the management with different individuals. It also helps to
retain higher profits. It offers efficiency in tax planning. More investors are attracted to this type
due to its reliable nature, this helps in capital formation. This also offers minimum personal
liabilities which can really benefit Sam.
Conclusion:
From the above report it is concluded that there shall a healthy working culture and
environment in the company and a proper management within the company so that the operation of
the business should be effective. The laws are made to help the businesses to run in a procedure and
guidelines stated in the act as to not get in trouble while there operation. The start up of an
organisation is with a motive of having name and fame together, with registering the business with
the correct type of legal structure of the organisation. Accordingly, Sam is suggested to choose
Limited Liability company, in this way he can have both in personal and professional life and does
not have to worry much about this investments and savings.

References:
Books and Journals:
Dowd, R., 2022. The United Kingdom: Business Aligns with Human Rights Advocacy. In The Birth
of Digital Human Rights(pp. 133-156). Palgrave Macmillan, Cham.
Ho, K.S., 2021. Reforming the Listing Rules on Special Purpose Acquisition Companies in the
United Kingdom. Journal of Business Law (Forthcoming 2022).
Ramsay, I. and Sandonato, B., 2018. An Analysis of the Business Objectives of the Largest Listed
Companies in Australia, the United Kingdom and the United States. Company and
Securities Law Journal,36(1), pp.98-110.
Tapia-Meza, P., Alvarez-Risco, A. and Del-Aguila-Arcentales, S., 2022. The Circular Economy: The
United Kingdom. In Towards a Circular Economy (pp. 247-262). Springer, Cham.
Parkinson, M.M., 2018. Corporate Governance in Public Companies. Corporate Governance in
Transition, pp.9-41.
Thomson, L.W., 2022. Is Decommissioning Liability Creating a Barrier to Deal Activity on the
United Kingdom Continental Shelf?. Aberdeen Student L. Rev.,11, p.68.
Liu, M., 2020. Real and accrual-based earnings management in the pre-and post-engagement
partner signature requirement periods in the United Kingdom. Review of Quantitative
Finance and Accounting, 54(3), pp.1133-1161.
Shardlow, S., 2020. Legal responsibility and liability in fieldwork. In Fieldwork in the Human
Services(pp. 117-130). Routledge
Sierra-García, L., Gambetta, N., García-Benau, M.A. and Orta-Pérez, M., 2019. Understanding the
determinants of the magnitude of entity-level risk and account-level risk key audit matters:
The case of the United Kingdom.The British Accounting Review,51(3), pp.227-240..