Nature, Formation and Management of Business Organisation in UK

This report explains the concept of business organisation in UK and the different types of business firms that can be run in the country. It also details the advantages and disadvantages of each type of business firm and provides recommendations for IOM Solutions. The legal business structure of UK companies is also explained in detail.

Business Law

Table of Contents
INTRODUCTION ..........................................................................................................................3
Business and Organizations in UK..................................................................................................3
The legal business structure of UK companies................................................................................5
Sole trader:..............................................................................................................................5
General partnership:...............................................................................................................5
Limited Liability Partnership:................................................................................................5
Limited Liability Company:...................................................................................................6
Recommendations for IOM Solutions:............................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................7

INTRODUCTION
The term business can be defined as the process by when on person sells some goods and
services and other person buys it. The business can be done by both online and offline mode. The
offline mode is the most used way of doing business. But, after the pandemic, the online business
is growing to a wider range in the market. The new entrepreneurs are emerging the business in
market. The owners of the business firms enable the transfer of goods and services to the final
customers(Biermeyer and Meyer, 2019). This report would explain about the different types of
business firms that can be actively operated in the business organisation. In addition to this, this
report would also explain about the merits of these firms in UK. It would also detail about the
demerits and tax composition of these businesses in UK. This report would also provide advise
to Sam to convert the IOM Solution to the other type of business firm that would eradicate the
businesses.
Business and Organizations in UK
The business law explains about the various operations that is to be held in the business.
These laws explain about the legal and the professional relations between the employer and the
employee. These establish a basic framework that guides the working of the business. It helps in
protecting the workers from the illegal and exploitative acts that is to be done by the employer of
the business organisation. This wBusiness and Organizations in UKould also detail about the
functioning of the different departments of the business organisation. Moreover, the employees
are the important part of any business business concern. This is because the employees provide
the support to the management to complete the assigned work on time. The progress of any
business firm is directly connected with the working of the employees. So, it is very necessary
for the management to adhere the needs and the wants of the business firm. Hence, there are also
various employment laws in UK to safeguard the rights of the employees in any of the business
concern in United Kingdom(Carmen, 2018).
Generally the Companies Act, 2006 is held liable to the legality framework of the
business organisations in UK. This law provide for various guidelines that is to be abide by each
business concern in UK. This provides provisions for every sector of industry in UK. It is
mandatory for every firm to follow these laws and provisions of the Companies Act, 2006. this
provides for the easy renewal of the employees of the firm. There are also various legal liability

and obligations of the business law as to be followed by every firm in the country. There are
various features of company as per this law. It specifies the company as the separate legal entity.
This means that the legal image of the company is not connected with its owners. This mean that
if any loss is occurred to the business, then it would have no impact on the member and
shareholders of the company. The company is also eligible to sue and to be sued in the civil
courts of UK. There is also the perpetual succession in case of company. This means that the
company would continue to exist even after the deceive of any of the shareholder of the
company(Deb, 2022). The operations and the existence of the company would be continued in
case of admission or removal of any of the shareholder of the company. It also has a separate
name and distinct seal for its legal operations in the eyes of law. which is valid.
The term vicarious liability would mean that the employer is totally responsible for the
acts done by his subordinate employee of the company. This is a type of master servant
relationship. So, if any negligence is done by the employee, then the employer is responsible for
it. This would mean that the company has to pay the charges of the damages occurred by the act
of employees in pursuance of its duties in the business. The director is the legal head of the
company. All Beth major and important decisions is to be taken by the director of the company.
The director is mainly the chairperson of the top management. So, there are various powers that
is being allotted to the director of the company. Moreover, the director has the liability for all the
actions that is done in the company. Every decision of director directly impacts the working of
the business organisation. So, the director must take the efficient decisions for the
company(Directors, 2020).
The partnership firm is governed by the Partnership Act, 1890. these firm has to be abide
by the laws that is being contained in the partnership law. Every company has two main
documents for its operation. The MOA is the Memorandum of Association which is responsible
for the long term goals and objectives of the company. It must be duly signed by all the
shareholders of the company. This provides about the basic framework for the operations of the
company in the market. With contrast to this, the AOA is Article of Association is the day to day
provisions for the working in the company. It explains about the daily rules and regulation that
has to be followed by each and every worker and member of the business concern(Giupponi and
Xu, 2020).

The legal business structure of UK companies
Sole trader:
The sole proprietor is the type of individual who runs his own business in the market. The
sole proprietorship is for a person who wants to do the business without the interference of any
other individual in business. The key benefit of the sole proprietor is confidentiality and fast
decision making. In sole proprietor the individual can take its own decisions in very fast manner
because he has to not take permission from any other person. The tax payment in case of sole
trader is also similar. This means that the tax of the business is to be paid under the name of the
sole trader and not under the name of the business firm. There is also some relief of tax in case of
sole trader. Moreover, the sole trader firm is very easy to run and operate. But at the same time,
the sole trader suffers from no personal time for his personal life. This is because all the time is
given to the business firm. There is also a addition demerit of sole trader is the the finance is to
be arranged by the single individual along with unlimited liability for the firm(Hardman and
Rowell, 2021).
General partnership:
The general partnership is the most used partnership firm in UK. In this, there are
minimal two individuals who agreed to do the business at the same place and under same name.
Both the partners are liable to operate the business organisation. But, in some cases where there
is the sleeping partner. The sleeping partner does not takes any part in the operations of the
business rather than only investing in the partnership business. There is less risk in case of
partnership firm as the partners has to share equal liability for the operations of the partnership
firm. This provides more time for the personal life of the partners which is not possible in case of
sole trader. The tax is imposed on the partnership firm and not individually. The finance is also
shared by both the partners. So, the burden for finance is not in the head of the single individual.
There also lies the joint liability in the partnership business for all the partners. This means that if
in partner causes loss to the business, then such loss is to be suffered by all the partners of the
firm. The financial risk is low in this kind of business(Moloney, 2021).
Limited Liability Partnership:
The LLP is governed by the Limited Partnership Act, 1907. The limited liability is the
other type of partnership firm which provides for lower liability as compare to the general

partnership firm. The partners in this firm has their limited liability to the specified extent. This
means that if the partnership firm has occurred loss in the business, then the partners are not
liable to sale their personal assets in order to fulfil the liability of the partnership business. The
loss is that it takes more time to take the decision for the firm because the partnership firm has to
take consent of all the partners before taking any important decision.
Limited Liability Company:
The limited liability company is ruled by the Companies Act, 2006. This type of business
has limited liability of all of its shareholders. The shareholders are liable to the profits and losses
of the company. The company enjoys the separate legal status in the eyes of the law. There are
number of shareholders of the company who are the real owners of the company. The tax is also
paid separately by the company to the tax department of the country. The shareholders has their
time for personal life in case of company. The company has main person as the director who is
responsible for the growth of the business in the market. Moreover, the company has to
employee other personal as per their skills to the different department of the organisation.
Moreover, the liability is also limited in this type of company(Tiwasing, 2021).
Recommendations for IOM Solutions:
The IOM Solutions must go with the option of limited liability company. This is because
it would provide the easy options for finance the operations of the firm. Sam would get low
return finance from the shareholders in order to expand the business in the market. Moreover, it
would also aid Sam in getting personal time for his friends and family. This would also help in
reducing stress of Sam due to the limited liability of the company. The firm would also aid the
firm in increasing the staff for the business. The increase in staff would aid in increasing the
output of the business which is necessary for the expands of business in the market. Moreover,
the company would also provide some relaxation in the tax payment to the tax department of
UK. Moreover, there would be low interest on finance as compare to other forms of the business
arrangement in the country. The company would also aid in finding the better options for the
expand of business in the market place. Hence, LLC is the best adhered option for IOM
Solutions(Werneck and Saadi, 2019).

CONCLUSION
This report concludes about the concept of business organisation that is being conducted
in United Kingdom. This report also summarises about the different types of business firms that
can be run in UK. It also explains about the advantages of company, partnership and sole trader.
This report would too conclude about the recommendation of taking Limited Liability Company
as a business change by Sam for the IOM solutions. This is because company is the best
available option to opt for by the IOM Solutions. Moreover, this report would also summarise
about the various other demerits and tax composition of the business firms in UK. It also
concludes that the company would also help Sam in managerial activities of eth business
organisation.

REFERENCES
Books and Journals
Biermeyer, T. and Meyer, M., 2019. Do UK companies make use of corporate mobility
instruments to ‘escape’Brexit?.
Carmen-Cristina, C.I.R.L.I.G., 2018. The future partnership between the European Union and
the United Kingdom.
Deb, E., 2022. International Business Law-Critical Review on Corporate Governance in
UK. Available at SSRN 4074105.
Directors' duties, F.B.D.L., 2020. Directors' duties.
Giupponi, G. and Xu, X., 2020. What does the rise of self-employment tell us about the UK
labour market?. London: Institute of Fiscal Studies.
Hardman, J. and Rowell, N., 2021. The UK's director daisy chain: Empirical evidence of the
interconnectivity of directors of UK publicly traded companies. European Business Law
Review.
Moloney, N., 2021. Financial services under the Trade and Cooperation Agreement: reflections
on unfinished business for the EU and UK.
Tiwasing, P., 2021. Brexit and skill shortages: An empirical analysis of UK SMEs. 739898418.
Werneck, B. and Saadi, M. eds., 2019. The public-private partnership law review. Law Business
Research Limited.