Different Types of Business Organizations and Their Legal Formation

This article explains the legal formation of different types of business organizations like sole proprietorship, partnership, private and public organizations. It also covers their management, funding, advantages, and disadvantages.

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Business Law
Explore how different types of business organisations are legally formed
The business organizations of UK helps in conducting business with
more effectiveness. There are mainly two types of business organizations
which are unincorporated and incorporated organization. Further, it has
been explained as follows:
Unincorporated organization: These are those business
organizations that has been made with less complex process. In this
organization are formed without any problem as no legal interference is
their. The organization covered within it are sole proprietor and partnership
they are explained as follows:
 Sole proprietorship: They are considered to be those organizations
which is most commonly formed business organizations. In this
single owners are there and holds responsibility regarding various
business activities. The owner of these business are known as sole
proprietor and all activities is handled by them. Registration process
include INHRC number which is required to be generated and name
is required only to commence business.
 Partnership firm: These are the organizations that has been made
with the help of two individual's with an motive to earn profit. In
this element are involved which is based upon aspects like risks,
costs, benefits and responsibility over running organization.
Partnership are mainly of two types that is general and limited. The
process of registration is based upon INHRC number.
Incorporated organization: These are those organizations that has been
formed through complex an lengthy process. In this organization which are
of public and private nature they are explained as follows:
 Private organization: These organizations is based upon various
kinds of documents collected by an organization and it is submitted
with this operations performed by them includes lengthy and time
consuming process. They uses Pvt Ltd in the end of its name and
shares are not given ton public.
 Public organization: They are those kind of organization which has
Public Limited in its end and can sell or share debentures to general
public. In this different aspects is covered that is based over making
organization stable in nature. In this digital signature of all owners,
members of memorandum of association and other importation
documents of required to be collected.(Surdam, 2020). Public limited
companies are also required to have at least two directors and a
company secretary.

Private organization: These are those organizations that has been managed
by directors and directors are appointed for running business. Funds are
arranged with the helps of bank loans and debentures.
Advantages
 These organizations works over right of succession which makes
organizations separate entity from its owners.
 Business privacy remains which makes secured business to run.
Disadvantage
 Formation process is very much time consuming and money
involved is huge making complexity reduced.
 In this divided ownership exists which makes common
disadvantages achieved over private limited organization.
Public organization: Managements means owners and stakeholders of
business organization. Funding is done through government institution,
health programs, community services, restoration program and even
environmental programs. Its advantages and disadvantages has given as
follows:
Advantages
 Public corporations makes formulation and implement done over
policies that makes public welfare promoted.
 Also the organizations deals over public corporation and red tap-ism
with bureaucratic perspective is covered within these organizations.
Disadvantage
 It enjoys immunity from parliamentary inquiry into its day-to-day
functioning.
 Public corporation incurs losses, the government provides subsidies
to make good the loss.
Explain how business organisations are managed and fundedwith advantages
or disadvantage of an organization
Sole proprietorship: Management of the organization is done by
owner themselves which makes responsibility handled by the owner only.
Funds are arranged through family members and friends or personal
resources. It advantages and disadvantage are given as follows:
Advantages Disadvantages
 These organizations are easy
to be formed which makes
profit earned to be kept by
the owner themselves.
 Formation process is very
easy which makes less time
consumed for its
establishment.
 Arrangements of funds are
done with difficulties that
makes business
organization's process hinder.
 These organizations faces
heavy loss upon various
activities as it is handled by
one person.
Partnership firm: These organization are managed by partners which
makes all process to be managed by them. Funds are arranged through
investment done by partners. In this advantage and disadvantage has been
given as follows:
Advantages Disadvantages
 As there are less legal
obligations involved within
business.
 This burden has been shared
by partners themselves
 The organization does not
have any legal status.
 There is limited access to
capital since only partners
arrange for it.