Key Sources of Laws for Business Organizations in the UK

This report discusses the legal context for business organizations in the UK, covering various forms of business organization and their advantages and disadvantages. It also provides recommendations for IOM Solutions to expand their business. The report emphasizes the importance of business law, including the statute of company law, employment law, and contract law. The report concludes that Limited Liability Partnership (LLP) is a suitable option for IOM Solutions to expand their business activities and satisfy the demand of their employees.

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:
Contents
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Table of Contents
Introduction ...............................................................................................................................3
Businesses & Organizations in the UK........................................................................................3
The legal business structure of UK companies..........................................................................4
Recommendations for IOM Solutions........................................................................................7
REFERENCES...............................................................................................................................9
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Introduction
The UK legal system is unique and complex and covers range of protection to secure the
rights of the individual. An organization is formed to conduct business activities with a
primary objective of earning higher profit. There are various forms of organization which
varies according to the nature, type and size of the business. It includes sole proprietorship,
Partnership, Limited Liabilities partnership and limited company etc. It is important for the
organization to encourage and motivate the employees to identify their efforts so tat they can
achieve the desired goal of the organization. Business law covers the statute of company law,
employment law and contract law and many more (Carree, Lokshin and Alvarez, 2019). This
report will cover various forms of business organization and its advantages and disadvantages
according to its nature and type. Further, it will provide the suitable recommendation to the
IOM solutions so that they can expand their current sole trader business into other potential
business.
Businesses & Organizations in the UK
Business is a group of people which is established and formed to satisfy the need and
demand of the market. It requires adequate resources such as capital, funds, machinery, labor
etc. to perform business activities. A company is regulated by the Act of 2006 which provides
certain unique features to an organization. It includes separate legal existence, common seal,
perpetual succession, limited liability etc. A registered company is considered as legal entity
which is always distinct from its owners. An organization of combination of people including
directors, shareholders, investors and employees who contributes their dedication towards the
success and growth of the business. The nature of the organization is complex and involves
continuous process. The dynamic and uncertain business environment requires the
management to frame effective plans and polices in order to deal with complex business
culture. Finance is manage by the finance manager who are appointed to prepare the financial
statement and maintain the financial accounts to ascertain the financial performance of the
organization. The shareholders are the owners who contribute their part of share in the capital
of the company. The role of employees are crucial as they are the asset of the organization.
Employment law is another important legislation of the UK that defines the roles and
responsibilities of the employees and employers to develop better relation between them. It is
enacted to protect employees from all kinds of discrimination that are generally take place in
the organization (Dawson, 2018). As per the Company law, several documents are being
prepared that defines the internal management of a company and helps in the process of
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decision making. It brings transparency and efficiency in the working system. The doctrine of
vicarious liability make the principal liable for the act of his agent which means employer
will be held liable for negligent act of their employees. Any kind of misconduct and illegal
activities can arise tortuous liability on individual and they will be liable for the mistake they
have done against the organization. The law of tort deals with the civil wrong that allows the
parties to claim their right with the help of damage and compensation that are guaranteed for
the loss and damages suffered by the parties. Directors are the heart and soul of the company
who take crucial decision for effective functioning of an organization. An Article of
Association and Memorandum of Association are the important documents which defines the
whole purpose and objective of the company. These documents are submitted to the
Companies House at the time of incorporation.
The legal business structure of UK companies
Sole Trader
Sole Trader business is owned and managed by the single individual. It involves less legal
formalities and easy to form. The management and function of the organization is handled
and carried out by himself. It involves less labor cost and chances of expansion is
comparatively less than the other form of organization. It is not required to register their
business and are not bound to any legal complexities (Kumaresan and Liberona, 2018). The
imposition of tax levied on the owner as he is responsible for all the profit & loss and not
required to share it with others. It is quite difficult for the sole trader to raise capital of the
organization and can raise funds only from banking institutions to enhance the scope of their
business.
Advantages of Sole Trader
 Easy to Form: The sole trader business is run by the single individual and involves
simple process to start a business.
 Less Investment: It requires less investment of funds and bear the full financial
responsibility at personal level.
 Flexibility: This form of business organization is flexible and less chance of conflicts
and dispute among the individual as it is manage by the sole trader.
Disadvantages of Sole trader
 Personal Liability: The liability of the sole trader is unlimited due to which he is
required to use their personal asset to pay off debts of the creditors.
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 Limited access of finance: It is quite difficult for the sole trader to raise capital to
expand a business. Lack of Financial resource may affect the overall performance of
the organization (Varshney, 2021).
 Lack of business continuity: Sole trader business can survive unless owner is not
retired or dies. After his death, business may comes to an end and considered as one
of the major drawbacks of this form of business organization.
General Partnership
A partnership is formed by the association of to or more person who are came together to run
a business. The partners are formed an agreement known as the Partnership deed which
defines the roles and responsibilities of each partner including their part of share in the firm.
It is generally made in writing to avoid conflicts and misunderstanding among the partners in
the future. It is regulated by the Partnership Act of 1890. Each member bears the loss and
profit equally and consent of each partner is important to make a effective decision for the
organization.
Advantages of General Partnership
 Simple operating structure: The partnership firm is formed to run the organization
effectively and efficiently. Each partner are well aware with the roles and
responsibilities due to signed agreement made between them (Majmudar, 2021).
Partners owes financial duty to one another to secure the best interest of the
partnership.
 Diversification of knowledge: Each partners comes from different culture, tradition
and posses certain set of skill and cap[abilities that may guaranteed the success of the
organization.
 Management and responsibilities are shared: Any loss and liabilities suffered by
the Partnership firm are responsible for managing equally so, it avoids burden on
single individual.
Disadvantages of General Partnership
 Unlimited Liability: The liability of the partner is unlimited which means the
partners are liable to use their personal asset o pay debts of the partnership firm.
 Disagreements could arise: Each partners have their own opinion and views which
may create dispute and misunderstanding them and leads to delay in effective decision
making.
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 Easy Dissolution: The partnership firm can be easily dissolved and in case of any
unexpected reason, partners can easily dissolve the existence of firm.
Partnership
The limited partnership is a type of partnership which has no separate legal existence like a
LLP. It is governed by the Limited Partnership Act of 1907. Each partner's liability is
unlimited due to which they are required to use their personal asset to pay debts of the
creditors. It is quite similar to general Partnership and formed to maximize profit.
Advantages of partnerships
 Easy to form: This form of partnership firm is easy and simple to form. It involves
less complex formalities and cost.
 Registration: the registration process of partnership is simple and not compulsory to
made in writing.
 Risk sharing: In this form of partnership, risk are shared among each partners which
reduces the burden of loss from them.
Disadvantage of partnerships
 Unlimited Partnership: The liability of the partners are unlimited and considered as
one of the major drawbacks of this form of organization (Misenti, 2021).
 Mutual consent: Consent of each partners are required to make decision which leads
to indifference in their views and perceptions.
Limited Liability
Limited liability Partnership firm is the extensive form of general Partnership. It is almost
similar to general partnership but have some unique features of company. The Limited
Liability Partnership Act of 2000 defines the rights and duties of each partners for effective
running of Partnership firm. It is formed with the objective of earning profit and providing
service to the clients. It is a legal entity which is always distinct from its members.
Advantages of Limited liability
 Separate Legal Existence: The limited Liability partnership is registered under
Partnership Act of 1907 which gives legal existence to the company. It has several
features of Company and have corporate identity.
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 Limited Liability: The liability of the partner is limited due to which their liability is
limited to the contribution they made to the LLP.
 Business for profit: The primary objective of LLP is to earn profit and are not
formed for charitable purposes.
Disadvantages of Limited Liability
 Lack of Privacy: In LLP, the privacy of the partners are affected because of public
disclosure of financial statements and accounts (Rye, 2020).
 No perpetual Existence: This kind of organization cease to exist due to death or
illness of the partners and leads to dissolution of the partnership firm.
Recommendations for IOM Solutions
IOM solution is a sole trader business that is managed by the Sam. He is dealing with
electrical parts at local garages and running since last eight years. The employees are
demanding expansion of business which is creating pressure on Sam whether to go for
business expansion by considering best potential business alternatives. Now, considering all
the forms of business organization, it is suggested to IOM solutions to choose LLP as a
potential business alternatives because it has some features of partnership and company
which enhance the scope of its existence. It impose limited liability over the partners and
have separate legal existence. It will reduce the stress of the Sam because this form of
business organization is most suitable options for the Sam as it will contribute in raising the
capital of the company. Therefore, it is recommended to IOM solutions to consider LLP as
the potential business alternatives which can bring major change in the business.
Conclusion
From this above report, it has been concluded that the business is dynamic and
uncertain culture that tends to change by the time. Business is established to maximize profit
and earn adequate funds to achieve the goal of the organization. There are different forms of
organization that varies according to the nature, type and size of the business. It includes sole
trader business, partnership, Limited liability partnership and general partnership etc. The
legal system of UK aims to govern, manage and supervise the activities of the organization to
bring positive relation among its members. The tortuous liability is arising on the person who
tries to commit illegal act within the organization. However, IOM solution can use LLP as
their potential alternative business to expand their business activities and to satisfy the
demand of the employees. The limited liability and separate legal existence of LLP
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contributes in the success of the organization. LLP is suitable option for the growth of the
IOM solution.
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REFERENCES
Carree, M., Lokshin, B. and Alvarez, H.A., 2019. Technology partnership portfolios and firm
innovation performance: Further evidence. Journal of Engineering and Technology
Management, 54, pp.1-11.
Dawson, D., 2018. Organisational virtue, moral attentiveness, and the perceived role of ethics
and social responsibility in business: The case of UK HR practitioners. Journal of Business
Ethics, 148(4), pp.765-781.
Kumaresan, A. and Liberona, D., 2018, August. A Case Study on Challenges and Obstacles
in Transforming to a Data-Driven Business Model in a Financial Organisation.
In International Conference on Knowledge Management in Organizations (pp. 263-276).
Springer, Cham.
Majmudar, S., 2021. The Era of Limited Liability Partnership. Issue 3 Int'l JL Mgmt. &
Human., 4, p.4584.
Misenti, N.C., 2021. VICARIOUS SUPERVISORY LIABILITY IN THE LLP, LLC, AND
CORPORATION: TIME TO DO AWAY WITH THE LAST VESTIGE OF THE GENERAL
PARTNERSHIP. Southern Law Journal, 30(1), pp.173-203.
Roberts, J., 2018. Multinational business service firms: The development of multinational
organisational structures in the UK business services sector. Routledge.
Rye, J., 2020. What is the difference between a sole trader and a limited company?. In Setting
Up and Running a Therapy Business (pp. 132-134). Routledge.
Sharma, J.K., 2020. Limited Liability Partnership as a Better Alternative to Incorporation. Jus
Corpus LJ, 1, p.440.
Varshney, M., 2021. Has the Limited Liability Partnership Model Provided an Effective
Alternative to the Complexity of Incorporation and the Personal Risks Associated with
Partnership Law. Issue 4 Int'l JL Mgmt. & Human., 4, p.657.
Whiteside, H., 2020. Public-private partnerships: market development through management
reform. Review of International Political Economy, 27(4), pp.880-902.
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