Legal Business Structures in UK Companies

This article discusses the different legal business structures available in UK companies, including sole trader, general partnership, limited liability partnership, and limited liability company. It also provides a recommendation for IOM Solutions to expand their business. The article emphasizes the importance of following business laws and regulations and the benefits of choosing the right legal entity for a business. Course code, course name, and college/university are not mentioned.

Business Organizations

Table of Contents
INTRODUCTION...........................................................................................................................3
Business and Organizations in UK..................................................................................................3
The legal business structure of UK companies................................................................................3
Sole trader...................................................................................................................................3
General partnership ....................................................................................................................3
Limited Liability Partnership......................................................................................................3
Limited liability company...........................................................................................................3
Recommendation for IOM solutions ..............................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES:...............................................................................................................................5

INTRODUCTION
A business is a kind of firm or organisation that is founded by its owners with the goal of making money by promoting and
delivering their goods and services to the ultimate consumers in the market. The business owner wants their company to stand out
among the competition in the market so that the business activities can run smoothly. The marketplace is a location where new
businesses comes every day which increases the competition in the market.(Fenwick and Wrbka, 2018). This benefits the economy by
making it easier for people to sell and exchange money in the market. Emerging entrepreneurs comes in the market in order to make
money and improve their level of living which results in the overall growth of them. Owners open up a business according to the
Investments and capital available with them which makes them decide on the type and size of business they want to invest in.
Business law thus helps to understand the different legal business structures available in UK. This project will provide information
about the different business structures, their merits and demerits and will give recommendation to Sam for a suitable type for his
business expansion of IOM Solutions.
Business and Organizations in UK
IN the country of the UK, activities of the business are generally carried out by the Company Act of 2006. This act facilitates
the business that how to conduct the operations in the workplace smoothly and effectively. Business is a very wide concept as it
includes so many things to do the operational activities. One of the main assets in the business is the employees who help the
organisations to increase their performances in the market. This tells that the business firms and the organisation should behave
according to the legislations that have been made in regards to the employees. When a new business came in to the market it has been
given a specific entity through which they have to carry out their work (Miller, 2021). That specific entity includes various
components like perpetual existence, separate or distinct properties and a stamp of the company or the seal by the business name. It
also includes the rights and the responsibilities in order to file a case for non-following of the laws and the rules that have been made
by the government. At the time of starting a business an organisation have to do so many legal formalities and the agreements.
Sometimes the unethical behaviour and the misconduct of the employees in the workplace can increase the liabilities of the
business. One of the main liabilities that are caused by the employees is the vicarious liabilities. This type of liabilities can take place
in the organisation when the employees behave with the dishonesty and do the wrongful act in the companies. This cause the employer
liable for the actions of employees and they should have to take serious action in order to eliminate those problems. Business in the
workplace also faces challenges in negligent behaviour of the staff in relation to their roles and responsibilities. The director and the
manager have the main responsibility to distribute the various roles and duties through which they have to carry out their work.
Sometimes the directors and the managers fail to distribute the rolls and responsibility effectively then the legal liabilities raised in
relation to the non-fulfilment of obligations (Walker, Pekmezovic and Walker, 2019). It is very necessary for them to carry out the
operations effectively so that they can promote harmony in the workplace. Misconduct or the unacceptable behaviour by the director
can make the employees more negligent and irresponsible. Organisations and the companies do not expect this type of behaviour from
the directors as they are the main persons of the company who are responsible for carrying out the work. The companies and
organisations can take strict action against them in order to eliminate the damages that have been caused by them. Upper management
have the power to terminate the directors if there is any serious breach that can be seen and they can also sue them with the criminal
offence or various kinds of mal practices. The property that has been offered to the directors can also be taken from them when there
is the termination of the contract.
The partnership act of 1890 tells about all the policies of the partnership firms and also tells how companies formed in relation to
the partnership. Memorandum of association and the Articles of association helps the company in effectively managing all the
activities in the workplace. MOA can be defined as a legal document that tells how the companies formed and it can only be
incorporated when all the shareholders and investors sign on the document (Davidson and Forsythe, 2020). On the other hand AOA is
a kind of written document which explains various rules and regulations of the company that should be applied in the workplace.
The legal business structure of UK companies
Sold trader can also be defined as sole proprietorship is a kind of business structure in which the IOM solutions have been
working. Sam has been working in this business for the last 8 years and for the past 2 years the business has seen a significant growth.
This type of legal entity benefits the Sam as all the earning and the profits is enjoyed by him only. He also has to bear the entire
burden and the responsibilities that are caused in the business (Beatty, Samuelson and Abril, 2021). Sam is now looking for a business
structure that can help him to generate more revenue in the future. Some of the legal business structures are mentioned below.

Sole trader
It is a type of a business structure in which all the activities of the business have to be managed by a single person. It is a very
cost friendly business structure that does not require so much registration fees. It is very easier to open and carry out the operation in
this type of entity. It is one of the most common forms of business that are now used by the young entrepreneurs. This type of legal
entity is so much beneficial for the person who has to carry out the activities on their own with the minimum investment. In this type
of structure a person can taking any effectively without taking any advice from others. It is also one of the most effective legal entities
as it requires very less paper work and less business fees in order to start the business. Owners who are looking to start a business with
a low investment can work under the sole proprietorship. On the other hand it has some disadvantages that the liabilities and the losses
have to bear by the single person (Buscemi and et.al., 2020). Various types of the taxes like income and corporation have to be paid by
the owner and they have to maintain all the data of the staff as well as customers in relation to the General Data Protection
Regulations.
General partnership
This type of structure can be defined as when two or more individuals come together in order to run a business. In this type of
business structure all the roles and the responsibilities are shared by the partners and they have to share the profit and losses in equal
proportion. It includes various types of components like they have to share the cost of the establishment, the business risk debt and
also the profits that will be generated from the business (World Bank, 2018). It is one of the most effective business structures as the
investment is doubled in it and various types of skills and experience come together in relation to carrying out the activities. It is also
an effective business structure because partnership does not face complex taxes and they do not have to pay the income tax because all
the profits and the losses have to bear by the partners individually. When the agreement of the partnership is about to end the
partnership firm can easily be dissolved at that time. Partners take effective decisions in order to increase productivity. But on the
other hand sometimes they face difficulty when one partner is punished for unethical actions in the company. This type of business
structure is governed by the partnership act which defines all the rules and policies they have to consider.
Limited Liability Partnership
This type of business structure generally offers lower liabilities in relation to the partnership. Limited liability partnership is a
different kind of business structure and relation to the obligation when there are limited sources of money that can be spent by the
partners. This type of business is generally carried out by the two or more persons and they are liable for all the activities and the
actions that will be taken in the business (Mayer, 2018). But the partners do not have the joint or the collective liabilities. This type of
partnership requires a registered office in relation to the government regulations. This business structure is governs by the limited
partnership act 1907 which is made in order to protect the interest of the partners.
Limited liability Company
This type of structure can also be defined as a private limited company that is governs under the companies’ act 2006. This type
of structure tells that how companies formed and carry out their operations and what are the things required forming a private
company. This legal identity also creates some legal obligations in relation to the roles and duties that are distributed to the managers
and the heads of the company. One of the main advantages of the limited liability company is that there are no restrictions on the
number of members as large amount of investment can be made in order to run the business (Bambara and et.al., 2018). Owners are
not personally liable and responsible for the business debts and the liabilities. Directors in this type of business structure have the main
duty to manage the activities. Shareholders own the company as they have made investments in it.
Recommendation for IOM solutions
As a business grows and develops it is very important for the business to timely expansion in order to capitalise on market
opportunities. It also helps the company in adapting to changing conditions. This shows that Sam should choose a limited liability
company to expand his IOM Solutions firm (Tabalujan and et.al., 2018). This type of entity contains a large number of advantages. It
makes it easier to delegate management responsibility to various people in the organisation. It also aids in the retention of bigger
profits. It helps in making tax planning efficiency. This type of entity will attract more investors, which facilitates in capital formation.
This also helps in decreasing the liability of the Sam.

CONCLUSION
From the above report it has been analysed that the business should make a proper management in order to carry out the activities
smoothly. Laws that have been made in relation to the business generally govern the operations in the workplace. Main aim of the
business is to earn more revenue and generate profits in the future. Profitability and the revenue can depend on the type and the size of
the business that the owners choose. A limited liability company has been recommended to Sam in order to expand his business. This
will also help him in attracting the investors to invest in his company which will help him in earning more profits in future. It has been
analysed that this type of business structure consists various advantages which helps in the growth of the business.

REFERENCES:
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Beatty, J.F., Samuelson, S.S. and Abril, P., 2021. Business law and the legal environment. Cengage Learning.
Buscemi, M and et.al., 2020. Legal Sources in Business and Human Rights: Evolving Dynamics in International and European Law.
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Davidson, D.V. and Forsythe, L.M., 2020. Business law: Principles and cases in the legal environment. Wolters Kluwer Law &
Business.
Fenwick, M. and Wrbka, S., 2018. International business law: emerging fields of regulation. Bloomsbury Publishing.
Mayer, C., 2018. Prosperity: Better business makes the greater good. Oxford University Press.
Miller, R.L., 2021. Business Law Today, the Essentials: Text and Summarized Cases. Cengage learning.
Tabalujan, B.S and et.al., 2018. Singapore business law.
Walker, J., Pekmezovic, A. and Walker, G., 2019. Sustainable development goals: harnessing business to achieve the SDGs through
finance, technology and law reform. John Wiley & Sons.
World Bank, 2018. About Women, Business and the Law.