Business Law and the Legal System - Case Studies

Unincorporated business is a corporation that is not legally separate from the owner. Owners
will be accountable for all aspects of the firm, including profit and loss. It has a short lifespan
and can be dissolved at the owner's discretion or when the owner passes away. Two types of
businesses are Sole trader and Partnership (Rowe, 2017).
Incorporated business is a corporation established by one or more individuals with a separate
legal entity without depending on any factors”. It means that the company can continue to operate,
possibly indefinitely, even if the owner is no longer living, unless it goes bankrupt. There are 2
types of businesses: Public company and Private company (Barry, 2018).
Types of
business
organization
Definition
It is owned
and managed
by one
individual.
(Twin, 2021)
Same as
owner
Personal
income
tax
Unlimite
d liability
Freelancers
(designers,
copywriters,
marketeers,
photographe
rs and social
media
consultants)
It inclued 2
or more
people
jointly
operating the
business.
Doctors,
lawyer,
accountants,
butchers,
small

(Carol, 2021) retailers
It privately
held shares
to few
investors.
(Jason, 2021)
Separate
legal entity
from its
owners
Corporatio
n tax
Limited
liability
Insurance,
banking,
restaurants
It sells ít own
shares to the
general
public.
(Marshall,
2021)
Saparate
with the
owners and
sharehodlers
Insurance,
banking
P4 - P5
Firstly, the owner must
select a company name.
Secondly, the company
must register with
HRMC (HM Revenue
and Custom). Finally, the
business need to file a tax
return every year
Management of this type
often belongs to the owner.
The proprietor can operate
the firm however he or she
wants instead of answering
the board of directors or
shareholders
-> The owners apply the
POCCC functions
(Planning, organizing,
- savings and retained
profits
- sale of property
- bank loans
- borrow from friends,
relatives and family
members

commanding, coordinating,
controlling)
The first thing that select
the “nominated” partner.
Secondly, choose a
company name. Then,
the collaborations will be
selected. Finally, the
business register with
HMRC
Partnership must choose
the manager because they
typically have 2 or more
partners. All general
partners have a right to
participate in management
-> The director carry out
POCCC functions
- savings, stocks and
bonds
- retirement account
funds
- secure bank loans
- borrow from relatives
and friends
- consider crowdfunding
business
- small business grants
from the Gov
- venture capital
investors
Firstly, choose a
company name. It must
not be the same as or
identical to the registered
name of another firm.
After that, the firm must
choose a director and
secretary. The company's
PSC (People with
Significant Control) will
The shareholders appoint
the directors. And the
director will hire
employees for day-to-day
operation. In addition,
managers develop vision,
purpose, objectives, and
rules (according to AOA)
-> The director perform the
POCCC functions
- debt capital: bank
loans, personal loans
and bonds, credit card
debt
- equity capital (the sale
of shares of company
stock): only sell shares
to friends, relatives,
family members and
employees

be defined. Next, prepare
documents such as the
memorandum of
association (MOA) and
articles of association
(AOA). Finally, the
company must be
registered, with an
official address and a
Company House SIC
code.
- selling shares and
bonds
- loans, debentures, and
overdrafts from
financial institutions
(Gov.uk, 2021).
M3 - D2
- easy to get started
- all decisions are made
by the owner
- maintain all profits
- modify the business
form easily
- quickly dissolve
(Galloway, 2021)
- personal liability
- marketing and
credibility
- tax effectiveness
- difficult to attract
highly trained workers
(Galloway, 2021)
Sole traders keep all the
profit. They do not need to
share with anyone and
manage the company the
way they like.
Sole traders are known for
putting in lengthy hours.
This is due to the fact that
they must bear the whole
weight of their company's
duty.
- easy to get started
- less expensive
- unlimited legal
- the personal taxation
All burdens and expenses are
shared in operating,
especially in the early stages.

- combine the resources
and expertise
- profits are not
required to be disclosed
to the public
(Bruna, 2021)
rate
- ownership transfer is
difficult
- personal differences
and conflict
(Bruna, 2021)
However, when choose a
partner that can share
obligations and commit
tocollaboration, a
relationship is difficult.
- limited liablity
- separate legal entity
- no need to answer to
any stockholders
(Wood, 2021)
- cannot sell share to the
public
- high set up costs
(Wood, 2021)
In general, a private
corporation is comparable to
a state-owned business,
except that if the number of
shareholders decreases, a
private corporation will
simply choose and run it.
- having a public
profile in the stock ->
making it easier for the
firm to issue shares and
bonds.
- obtaining funds
through a public stock
offering
- increasing the number
of shareholders and
sharing risk
(Korchak, 2021)
- higher levels of
transparency required
- more vulnerable to
takeovers
- initial financial
commitment is higher
(Korchak, 2021)
It is easy to raise share
capital because the company
can sêll share to public and
people can invest directly in
the company, become
shareholders.
Critical review, evaluation and conclusion