Key Sources of Laws for Business Organizations in the UK

This report describes the legal context for business organizations in the UK and the key sources of laws that govern them. It covers different business structures such as sole proprietorship, general partnership, limited liability partnership, and limited company, along with their advantages and disadvantages. The report recommends that IOM Solutions switch from sole trading to a general partnership to expand their business.

Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of laws
as the legal context for business
organizations in the UK
Submitted by:
Name:
ID:
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Contents
Table of Contents
Introduction ...............................................................................................................................3
Businesses & Organizations in the UK........................................................................................3
The legal business structure of UK companies ..........................................................................5
Sole Trader.............................................................................................................................5
General Partnership...............................................................................................................6
Partnership............................................................................................................................7
Limited Liability......................................................................................................................7
Recommendations for IOM Solutions........................................................................................8
Conclusion..................................................................................................................................9
REFERENCES.............................................................................................................................10
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Introduction
Business law is the ruling law which covers all the rules and regulations regarding the
business sector and the market. It is necessary to comply with all the laws which were
prescribed in a business law for all the business organization's. Business law is also known as
corporate law as it acts as the legal model for the different business structures. Business law is
a wide term which covers all the businesses in the United Kingdom. Under this field of law
parliament of the United Kingdom enacted the Company Act, 2006. This act becomes the
framework for all the business organization's and through this act the functioning of company
activities become easy and legalized. In UK mainly there are four type of business structures
such as; Sole proprietorship, General partnership, Limited Liability partnership and Limited
company. All these business structures have different process to get established, carried
different features, characteristics (Adamou, Kyriakidou, and Connolly, 2021). This report will
cover these four types of business structures along with their advantages and disadvantages of
each. This report has the purpose to pass the recommendation to the sole trader who
performed his business by selling electrical parts known as IOM Solutions. An advice should
be made on switching the business structure from sole trading to any other with the motive to
expand the business.
Businesses & Organizations in the UK
In the country like United Kingdom there is a great impact of businesses in its
economy. UK is known for its legal system in a world and that legal system provides the
company act to the nation which support the business sector and force the people to invest in
UK. Almost half of the UK economy is based on business it means through businesses they
generate the real income which is used to regulate the functioning of the nation. In UK mainly
there are four types of business organization structure which are running and perform their
business activities. Due to different structure of each business organization that difference
will also discriminate its nature from each other. Some structure's are considered as small
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scale businesses like sole proprietor and general form of partnership and some are considered
as large scale businesses such as; limited liability partnership and the Limited company. The
functioning areas of these business structures define its nature and the management of a
company would depend upon the scale or size of the business organization. The company act
has various provisions regarding businesses and apart from the company act there are some
other act also which carries some provisions regarding business or the business activities.
There is an Employment act which contains the provisions regarding employer and
employee's relationship which also get use in the business relation, there is Law of Contract
which assist the business companies in forming relations with other companies and bound
each other to fulfill their part of performance. There is one more law which also applied in
business activities is the vicarious liability which is the part of Law of tort. This concept has
made the employer liable for the negligence and misconduct of the employee towards the
business in the course of time (Basuony, Mohamed, and Samaha, 2018). The concept of
vicarious liability also got applicable in the partnership form of business structure where all
the partners has the liability towards the other partner's misconduct and negligence.
Partnership form of business structure is one of the easiest and successful structure of
business where two or more member contributed their efforts in growing the company. But
also if the partner's got some dispute in a business which can be possible then, the unity also
become the reason of dissolution the company. There are some reasons due to which
partnership comes to an end;
 If any partner dies
 If any partner got bankrupt
 When the time period of the partnership comes to an end
 Goal of the partnership got achieved
 Through notice also it can be dissolved
There is another form of business organization which has many functions to perform and
departments to controlled known as Limited Company. To manage the function of such large
scale company's there are some board of directors who controlled the management and its
functions. Some role which has to be performed by the company's directors are;
 Perform the duty in company's interest
 Wisely use the company's assets
 Hold the confidential information
 Attend the meetings of a company in regard to provide success.
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In the Limited company, it is necessary to do the registration at Companies House and at the
time of registration only company should prepared two documents i.e. Memorandum of
association and Article of Association. These are the documents which carries the internal as
well as external policy of the company.
The legal business structure of UK companies
In the beginning of business there can be different types of thoughts and excitement
and also some challenges which never got experienced. If any person start with wrong set up
then, lot of complications has to get faced like tax, liabilities and the administration work and
also cost. In the United Kingdom there are some different kinds of business structure which
were running successfully and almost every year millions of new businesses got established
there (Kairinos, 2021). The different business structure's are; sole proprietorship, general
partnership, limited liability partnership and the limited company. All these have different
features, structure's, number of members and the authorities who controlled the business
operations. These structures are discussing below along with their advantages and
disadvantages.
Sole Trader
The Sole proprietorship is the most easiest form of business structure which can be
use by the people to start their business. In the initial stage almost all the companies which
now become the large scale industries in business started from the sole trading and after
understand the business market they bring changes and grown their company. It has the easy
process to established the company, it doesn't required much formalities and fund to start the
business. There is only single person who is also the owner of the company and the owner
alone controlled all the business activities and also get the whole profit of the company. Such
business structure got the registration in HMRC.
Advantages
 It has the simple procedure to establish the business
 There is not high responsibilities
 Owner receives all the company's profit
 Owner can take its own decisions as per the situation
 No danger of leaking the information
Disadvantages
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 Owner alone bare all the losses and debts in business
 Owner has unlimited liabilities
 Owner can't shared the risk
 No support of anyone in a business
General Partnership
This form of business structure is also considered as the simple form of business. In
the partnership there can be more than one member who also becomes the owner of the
company of some share. To established the company's structure an agreement would be made
between the partner's in which they agree to share the company's profit and loss in that share
of which they become the member of a company. In the starting of establishing the company
each partner brought the share capital to invest in business and that share capital decides their
share of ownership in a business. In such kind of business structure partner's has not the
limited liability, they are liable to pay off the company's loss and debts. Apart from the
company's loss partner's are also liable for the misconduct and negligence of the other
partners (Liu, 2018). Tax liability is also there in which partner's has to pay the tax from their
personal income and it got decided at the time of registration the company in HMRC.
Advantages
 Follows easy procedure to establish the business through an agreement
 Agreement can be alter
 Partner's have support of other partners.
Disadvantages
 Partner's has liability towards the company
 Partner's got liable for other partner misconduct and negligence
 Tax would be deduct from partner's income
Partnership
This form of business structure has the feature of company that will the reason it is
also known as “Limited Liability Partnership”. The registration of the company will be done
in Companies House, and also has to informed to HMRC. The tax liability in this structure is
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same as the general form of partnership, partners will pay the tax from their personal income
and they also have to pay the National Insurance (Rafindadi, and Mika'Ilu, 2019).
Advantages
 Partner's have limited liability
 Partner's are not liable for other partner's negligence
Disadvantages
 Partner's have higher administration responsibilities
 Partners have to prepare end year account
 Tax would be deducted from their personal share of income
Limited Liability
It is the most difficult form of business structure where it is difficult to manage the
company operations. There are various departments for each functions like; human resource,
marketing, finance etc. it is necessary to examine the functions of each department to make
sure that company's operation are performed correctly. To look out the performance and to
make decisions and policies, company has the position of board of directors who take care of
the business operations and take good decisions for the company. Company has to be
registered at Companies House which gives relaxation to the partner's from the company's
liability (Repiquet, 2018). In this form of business structure tax would be paid as corporation
tax and not from the personal income of the partners.
Advantages
 Partner's has no liability towards the company
 Partners get the income after deduction of tax i.e. corporation tax
 Raising of fund is easy
 Board of directors plays crucial role in managing the company's operations
Disadvantages
 Establishment of the company is difficult
 Carries high administration responsibilities
 Required high amount of fund to run the company
Recommendations for IOM Solutions
All the business structure are beneficial in their positions, all carried some advantages
and disadvantages to perform business. It is up to the person choice that at which structure
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they want to do their business activities, like if some single person wants to do the business
then there is an option of sole proprietorship and if two or more persons wants to do business
them they can choose the general as well as limited liability partnership. The limited company
is also the option left which got used by those people who has sources of fund and the
contacts which run their business in profit (Reuschke, Mason, and Syrett, 2021). All these
business structure's has their individual characteristics on which they run. In regard to
recommendation Sam who is a sole trader and dealing with the electrical parts with the name
of IOM Solutions for the last eight years. Sole proprietorship is very beneficial at particular
point of time, person can learn the business tactics which the same thing done by Sam. But as
the business goes older it will no more beneficial because, it doesn't matter that owner is
earning more year by year the tax penalty equivalently increase as income. It will better for
IOM solutions to switch the business structure from sole trading to general form of
partnership. In general partnership business will easily expand and also liabilities of the
company got distributed among the partners.
Conclusion
In the above report it is cleared that all business structure has its own position to
perform in a business market. Business in UK is the foremost occupation of the people, due to
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positive business environment. In UK there are few business structures like; sole
proprietorship, general partnership, limited liability partnership and limited company. These
structure were thoroughly discussed above to fulfill the motive of the report. In last
recommendation was made to Sam to switch the business structure from sole trading to
general for of partnership and the recommendation was made for the purpose to expand the
business.
REFERENCES
Books and Journals:
Adamou, M., Kyriakidou, N. and Connolly, J., 2021. Evolution of public-private partnership:
the UK perspective through a case study approach. International Journal of
Organizational Analysis.
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Basuony, M.A., Mohamed, E.K. and Samaha, K., 2018. Board structure and corporate
disclosure via social media: An empirical study in the UK. Online Information
Review.
Kairinos, N., 2021. Reflecting on over a year of remote training, and where businesses must
go from here. Strategic HR Review.
Liu, J., 2018. Policy Briefing-Management Capability, Business Support and the-Performance
of Micro-businesses in the UK.
Rafindadi, A.A. and Mika'Ilu, A.S., 2019. Sustainable energy consumption and capital
formation: Empirical evidence from the developed financial market of the United
Kingdom. Sustainable Energy Technologies and Assessments, 35, pp.265-277.
Repiquet, M.D., 2018. Report from United Kingdom: UK Private Fund Limited Partnership
2017-Preserving UK Reputation Post-Brexit. Eur. Company L., 15, p.97.
Reuschke, D., Mason, C. and Syrett, S., 2021. Digital futures of small businesses and
entrepreneurial opportunity. Futures, 128, p.102714.
Sweeting, R.C., 2022. UK venture capital funds and the funding of new technology-based
businesses: Process and relationships. In Venture Capital (pp. 315-336). Routledge.
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