Key Sources of Laws for Business Organizations in the UK

This report describes the legal context for business organizations in the UK and the different forms of business along with their merits and demerits. It also provides recommendations for IOM Solutions. The report covers the Companies Act of 2006, employment and contract laws, and the Partnership Act of 1890. The recommended form of business for IOM Solutions is Partnership. The report is relevant for PRO348 Business Law, BSc (Hons) Business Management, and BMP4002 Business Law.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
Submitted by:
Name:
ID:
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Contents
Table of Contents
Introduction ...............................................................................................................................2
Businesses & Organizations in the UK........................................................................................3
The legal business structure of UK companies..........................................................................3
Sole Trader.............................................................................................................................4
General Partnership...............................................................................................................4
Partnership............................................................................................................................5
Limited Liability......................................................................................................................5
Recommendations for IOM Solutions........................................................................................6
Conclusion..................................................................................................................................6
References .................................................................................................................................7
Introduction
Business law is a part of civil body which specifies regulations regarding the conduct
of business and their obligations which one needs to comply with. Business law in itself
covers a number of legislation's such as Company, Contract and Employment laws, which all
work in collaboration to each other which further helps in carrying the affairs of the business
in smooth and efficient manner. These regulations specifies certain rights, responsibilities and
obligations of every concerned individual as well as company. Moreover, the process of its
formation and dissolution are also required to be performed as per the prevailing regulations.
The said report is going top elaborate the different forms of business along with their
demerits and merits. It also covers the effect of legal implications which can affect and be
most suitable for the business of Sam. There lies the recommendations for the Sam for
adopting the new form of for his business of IOM solutions , where he wishes to expand the
existing limits(Abuselidze and Katamadze, 2018).
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Businesses & Organizations in the UK
Generally for the function of the business, the United Kingdom is considered as one of
most safest place and also it is reasoned that the laws of the country asks for easy form of
compliance. According to the index of world bank ease of doing business, United Kingdom
has also attained the title of highest ranking among all the other countries. One of the leading
legislation which looks after the workings and management of the companies is of
Companies Act of 2006. every business in order to ensure its effectiveness, other than the
companies act needs to comply with the employment and contract laws as well. As the
conduct of workforce which is the workers are directly related with the growth of the
business(Cappellino, 2020). Also, as the company is required to enter into number of
transactions and agreements which are4 mainly governed by the contract laws, in order to
achieve certain goals. The companies enjoys various titles each depending on their type, such
as the limited liability companies have the privileged of separate legal entity, where both the
owner and the company are treated in an individual capacity which means that the members
cannot be made liable for the acts of the transactions or debts of the company. Other than this
there also lies the titles of perpetual succession, letter of intent and non disclosure agreements.
Moreover, the Memorandum of association and Article of association are the two documents
which acts in the capacity of constitution for the respective company. Also there are
mentioned various duties which the directors and the other concerned members of the
company are bound to follow. One is also subjected to the liabilities and legal actions when
the acts are done by the directors while exceeding their given authorities that is the acts done
in ultravires. Other than the companies act the major legislation which specifically regularize
the matters of the partnership firms is the Partnership Act of 1890. The process with respect
to the dissolution of a company are also required to be carried out in the manner as prescribed
by the legislation as this involves the number of rights attached to it.
The legal business structure of UK companies
At the option of the person who wishes to start their new business venture or tying to
expand the existing one, there lies the option of various different forms of business. Each
form comprises of their own benefits and disadvantages and also certain obligations and
duties which one is bound to fulfill. Moreover, the existing legislation of the country with
respect to the business law also plays a crucial role for the ascertainment of any form as it is
required for the owner to know that which form enjoys the minimum legal
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obligations(Clarkson and Miller, 2020). So in order to find out the best suitable form for Sam
as per his stated requirements, one needs to assess all the existing forms which are as follows-
Sole Trader
This business form is a type of self employment which is also addressed by different
names such as sole proprietorship and single owner business. Generally this form is taken up
by the new emerging business or the businesses which are being operated on small scale.
Here the person who is responsible for the activities of management and control is the owner
themselves as they alone are entitled to have the whole share of profits which has been
incurred from the business arrangement. In United Kingdom , this form is most advised and
prevailing one at the choice of the owners. Moreover, in order to start a sole proprietorship
business there lies minimum requirements with respect to its formation as there lies no
mandate of its registration. Also, the acquiring of capital in this form is an easy task as the
same can be managed from the part of savings, personal borrowings, etc(Formosa, 2018).
Advantages are, proprietor has the sole control over the business and retain the whole
amount of profits. The issue of privacy with respect to the information and transaction does
not prevail as proprietor themselves handles all such tasks. Also, the establishment costs of
this are very low and does not requires much formalities. Disadvantages are, the liabilities of
the business lies solely on the head of one person that is the owner. Also, as being the only
person to take care of the managing and controlling of the business becomes complex task.
Other being, the form possess certain financial risks which means that the owner is also
bound to pay the creditors out of personal assets if the same are not settled out of the
belongings of the business. Furthermore with respect to the legal obligations, as this
particular form is not entitled to have the status of separate legal entity, the proprietor
themselves has to pay the stated tax assessments out of the total generated revenues of the
business.
General Partnership
This type of business is an unincorporated from of business where there stands no
such mandatory requirement of its registration to mark the legal existence of it. It is defined
as the arrangement which takes place between two or more individuals who joins together
with the aim of earning profits. This form of partnership survives by default. Moreover, there
lies two major elements which are required to be fulfilled in order to constitute the general
partnership. The first being the availability of two or more than two people. The other is of
that the concerned individuals are required to agree to the fact that they at later stage can be
required to settle the debts out of their personal belongings. Here the engaged people which
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are addressed as the partners must enter into agreements and transactions for the activities of
the business on behalf of all the partners and the said agreements will stand binding on all the
other remaining partners(Graw. Et. al., 2019). The document which outlines the structure,
duties, rights , manner for carrying out the business, etc is the agreement of partnership.
Moreover, in the absence of any such agreement the partnership is said to be dissolved with
the death or discontinuation of any of the single member. The advantages of general
partnership are that there lies no such hectic process for its incorporation as formation of this
is more of an informal nature. Also the management of business becomes an easy task as the
work gets divided among all the partners and similarly the liabilities are. The disadvantages
are that the members are entitled to unlimited form of liabilities. Also with the involvement
of more number of people there can take place the conflict and disagreements which can
affect the business also. For the part of legal implications, the partners are required to pay
the taxes on their part of generated profits rather than on paying the whole of the total income
of the business.
Partnership
It is very much similar to that of the general partnership and the only point where the
difference lies is that, the partnership is of more formal nature which means it is an
incorporated form where the registration of it is a mandatory requirement. Further, the
Par5tnership Act of 1890 is the one which particularly deals with the affairs of the partnership
firms and also states the requirement of partnership deed. All the profits and liabilities of the
business are to divided in equal share among all the concerned members of the business and
with this all stands equally liable for carrying out the affairs and fulfilling their duties towards
the business. The advantage of this form is that all the tasks and liabilities are divided among
the partners and hence with this the burden does not lies solely on one person. Disadvantage
can be that, one does not enjoy the sole control over the affairs and hence is required to take
decisions which are based on the majority. For the legal implications, as similar to that of the
earlier one, the tax assessments are to paid by the partners only on their parts of
income(Myers, 2020).
Limited Liability
The from of limited liability consist attributes of both the partnership firm and
corporate companies. Because the liabilities of the members is of limited nature as similar to
that of the limited partnership and corporate as it comprises of the functions of business. The
form has been defined as the arrangement which takes place between two or more individuals
who in coordination to each others aims of running a business and having profits out of it.
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The people who are engaged while paying certain contribution to the total capital are
addressed as the partners and acts in the capacity of co-owners of the business. Further, as the
name suggest the liabilities and profits of the company are shared among all the partners in
the ratios in which the one has invested in the business. Which means the partners enjoys the
limited form of liabilities. The company also enjoys the status of separate legal entity which
empowers the partners to keep their personal assets separated from that of the company and
also are not bound to use the same for the payment of creditors. For the purpose of payment
of taxes the members are individually liable to the extent of their share of profits. The
drawback in choosing this form is that there can arise delay in the process of decision making
reason being disagreements an conflict of ideas and thoughts among the partners of the
company(Sarah and Vida, 2020).
Recommendations for IOM Solutions
The form of Partnership business is the one which has been recommended for the
given case of Sam for his business of IOM solutions. As stated in the case scenario one is
looking for the choices to further expand his existing business of electrical parts. Also as the
business is getting demand of the customers but unable to fulfill the same because of the lack
of adequate number of people to manage the same. Therefore if Sam goes with the option of
partnership model, with this he can engage more people who can look after the affairs of the
business very well and manage the same. Also the Sam will not be left alone with the burden
of business as well as for bearing the liabilities(Schmitthoff, 2020).
Conclusion
From the above report it can be summarized that Business law is a part of civil body
which looks after the day to day activities and the transaction which are involved in the
business. Moreover, there are different forms of business which one can opt for in order to
incorporate their business such as partnership, sole trader , etc. Also after analyzing all the
forms which has been mentioned in the report, the form of Partnership business is the one
which has been recommended for the Sam.
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References
Abuselidze, G. and Katamadze, G., 2018. The importance of legal forms of business subject
for formation of business environment in Georgia. Kwartalnik Nauk o
Przedsiębiorstwie. 49(4). pp.83-88.
Cappellino, A., 2020. How to Choose the Right Business Organization Form.
Clarkson, K.W. and Miller, R.L., 2020. Business law: Text and cases. Cengage Learning.
Formosa, A.M., 2018. From a sole trader to a company: a legal and financial
analysis (Master's thesis, University of Malta).
Graw, S., et. al., 2019. Understanding business law. LexisNexis Butterworths.
Myers, D.H., 2020. Corporate Implementation and Business Forms. In Sustainability in
Business (pp. 61-83). Palgrave Macmillan, Cham.
Sarah, R. and Vida, A., 2020. Business law. Pearson.
Schmitthoff, C.M., 2020. International business law: a new law merchant. In Current Law
and Social Problems, II (pp. 129-153). University of Toronto Press.
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