The Structure of Business: Legal Statuses, Sources of Funding, and Sectors within UK Economy

This report covers various legal statuses of business with its strengths and weakness. The report includes source of finance that is available to the start-up business. It identifies three sectors of economy in which business can operates to promote value of UK economy. The report also covers HR policies and its significance in the modern workplace setting of the business.

Structure of business

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Question One:..................................................................................................................................3
Legal statuses of businesses........................................................................................................3
Sources of funding......................................................................................................................6
Question Two:..................................................................................................................................9
Three sectors within UK economy..............................................................................................9
Question Three:..............................................................................................................................11
HR policies and its significance................................................................................................11
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business structure is the set of activities which includes task allocation, supervision,
coordination, and supervision to accomplish company goals. It describe legal structure of
organisation which impact its business operations. The UK government support start-up business
by granting them suitable amount of loan (Aaldering, 2018). The chosen start-up business for
this report is Fashion creation, which offers varieties of products and services in retail. Fashion
creation execute business activities in the parts of UK and deals in retail of fashionable clothing
segment. The appropriate source of funds is required for operating day to day expenses. The
report covers various legal statuses of business with its strengths and weakness. The report
includes source of finance that is available to the start-up business. It identifies three sectors of
economy in which business can operates to promote value of UK economy. The report also
covers HR policies and its significance in the modern workplace setting of the business.
TASK
Question One:
Legal statuses of businesses
Start-up business explore several opportunities (business expansion) and face numerous
challenges (competition level). The legal statuses of business structure help in setting up star-up
business and provide them separate legal entity (Acuña-Carvajal and et.al., 2019). The legal
statuses is the significant element for evolution of company which own appropriate legal
structure and rules. There are some legal statuses of business which can be opt by Fashion
creation to execute its business activities.
Legal statuses Meaning Strengths Weakness
PLC The PLC is stands for
Public Limited
Company, which offer
shares of stock to the
general public. The
shares holders of PLC
have limited liability
 PLC can
explore growth
and expansion
opportunities
because of its
acquisition
funds in the
 PLC require
some legal
requirements
(trading
certificate) to
protect the
interest of

who are not
responsible for any
business loses.
Example- Amcor PLC
, Anglo American
PLC, Antofagasta
PLC.
research and
development
which support
new project
and market-
base.
 Shareholders
have limited
liability which
push individual
to invest in the
enterprise.
 Going public
enhance exit
business option
for the future
perspective.
 PLC have
negotiation
opportunities
between
suppliers and
company
which support
economies of
scale.
shareholders.
 It has more
complex
accounting
requirements
with high cost.
 PLC involves
the risk
associated with
hostile
takeover due to
lack of control
over
stakeholders.
LTD Limited company is an
enterprise which
execute business
activities where each
shareholder's is highly
 Maximum
advantage of
having LTD
company is
limited liability
 LTD must
registered its
business in the
companies
house that will

responsible for
financial liability of
company. The
directors of LTD are
not responsible for
business debt.
Example- Greenery,
John Lewis
Partnership, Stemcor.
protection
because it is
treated as
separate legal
entity where
business debt is
divisible
among
shareholder. It
is good for the
investors of the
company
which promote
profitability of
company.
 Investment and
lending
opportunity
because
multiple
owners can
raise funds and
access to more
lending
opportunities.
show company
information on
official website
of companies
house. So
company have
to provide
actual details
of
shareholders,
directors and
financial
account.
 Company have
to bear
accountancy
cost while
hiring
accountant
who manage
activities of tax
return. They
charge heavy
fees to manage
taxation
system.
Partnership This is the common
form of business
established between
two and more
individual. They share
 Partners share
obligation for
executing
business
 Profits must
share on equal
basis that may
occur
inconsistency

common business idea
by dividing equal loss
and profits in business.
Example- Social
chain, Whats App,
Carphone Warehouse.
operation.
 They divide
job role and
responsibilities
by matching
skills to
accomplish
goal of
company.
 All partners
raise fund for
the potential
growth of
company.
among partners
because it is
not necessary
that each
business
partner share
equally amount
of work
contribution.
 Partners may
face
disagreements
and disputes
during decision
making.
Community interest
companies
This is designed for
the development of
social and non-profit
sector to support
economy of UK. It is
registered in
companies house and
they have access
limited by guarantee
as per laws. (legal
status of business,
2018).
Example- Local
transport provision,
day care centres.
 They have
freedom to
trade and are
capable enough
to pay
directors. They
retain benefits
of company
and promote
community
development.
 The investors
can enjoy
maximum
benefits (ROI)
along with tax
 Some
charitable
trusts cannot
fund during
auditing
community
statements
(Legal
structure,
2019).

regime during
their
investments.
Fashion creation should adopted LTD Legal statuses of its business because they can enjoy
limited liability protection by dividing debt among each shareholder. Company can also take
advantage of investing and lending opportunities by the help of of owner's fund.
Sources of funding
Fashion creation is the new start up business which require appropriate source of funds
for day to day operations. For long term sustainability, company require potential source of funds
to accomplish their specific goals (Baker, 2021). The appropriate source of funds help company
in growing their business expansion and manage productive resources to accomplish long and
short term objectives.
Bank loans- The Banks loans are most common and effective sources of funding that
are essential for small and medium size business (Beynon-Davies, 2019). The banks offer
various advantages to the start-up business by providing personalisation as well customized
services. The bank provide business loan up to £ 500 to £ 2500 for promoting start-up business.
To apply for the bank loan, business have to qualify some requirements like resident of UK and
business members must have eighteen plus age. Bank will charge 6 % fixed interest rate against
loan and business can repay loan within one to five years (Bank loan, 2021).
Strengths
 Banks provide loans at very cheap rate as compared to other sources of fund like venture
capital. It also provides facilities like credit cards as well as overdrafts that is beneficial
for company profitability.
 Benefits of Tax is granted by the government on the bank loan for business purpose.
Weaknesses
 Regardless of good civil code and profitable business, banks demand collateral security
in return of bank loan Because they have to protect from heavy bad-debts of loan.
Business incubators- It is an organisation which aid start-up companies by providing
them range of services (finance) with proper training and office space.(Boyce, 2017). They

offers optimum resources and services with support of management and technical assistance.
They invite future business and fledgling premises which manage administration, technical
resources and logistics. They provide mentorship, low cost workplace, expertise, working capital
and loan to support start up business.
Strengths
 It provide low cost workplace (convenient working area) for executing business activities
that reduce overhead expenses of the start up business. This will accelerate business
opportunity that deliver expertise, mentorship and funds to operate business.
 They offer business development programmes which enhance overall performance of the
business and increase profitability. They structured environment concentrate on company
objective towards right direction to maintain competitive benefit.
Weaknesses
 The application process is very rigorous as well as competitive in the application of
business plan.
 The business incubators need proper time commitment during their trainings and
workshops.
 They focus on the professional environment for investing their funds in the start-up
business.
Venture Capital- The Venture Capital is the financing tool for organisation who provide
short term money for enhancing long term wealth of business (Bucheli, 2019). They invest in
advance technologies and products which has high potential profits. These investments are
defined as high risk and high return opportunities. Generally, venture capital invest in the
innovative projects and its suppliers participate in the management of the company.
Strengths
 The large amounts of finance can be raised by the venture which help start up company in
executing day to day expenses (Clauss, 2017).
 It aid in managing risk that is involved in the start up business through proper guidance
and enhance ability of start-up business in dealing complex situations.
 In case of legal, tax and personnel matters, VC provide appropriate support for company
growth. This will enhance chance of better future performance and ability to build
competitive advantage.

Weaknesses
 Loss of control is the biggest drawbacks which is attached with equity financing that can
be compounded with venture capital.
 Minority ownership status of business in the venture capital is depend on the size of VC
stake. There is chance of losing stake of 50 % over management control.
Bank loan is the suitable source of fund for Fashion creation because rate of interest is
low as compared to other financial sources (Source of finance, 2021). The source of Bank loan
also maintain control of business because company do not have to give up its equity shares.
Question Two:
Three sectors within UK economy
The public, private and voluntary sectors are three main sectors of UK in which business
execute to raise economy of country. The public sector is the organisation which offers basic
public services like education, health, roads, policing, and armed forces (Evans, 2018). These
kind of services are provided through financial gain from taxation. The private sector involves
individual and organisation which deliver products and services with purpose of profit making.
Example of private sectors are shops, manufactures, financial services and so on. In this, profits
are transferred among owners and shareholders and can be reinvested for the business expansion.
The voluntary sector is totally different from public and private because it is not controlled by
government and also not aim towards profit creation (Huang and et.al., 2018). The voluntary
sector address social issues and promote economy of country. Example of voluntary sector are
charities, civil society, community sector, non-governmental and so on.
Basis Public Sector Private Sector Voluntary Sector
Meaning The public sector is
associated
with nation’s economy
that is under control of
government,
irrespective central,
state and local
The private sector is
associated with
nation's economy that
is mainly controlled by
private individuals or
companies.
The voluntary sector is
the organisation whose
purpose is to develop
social impact instead
of profit.

government.
Objective They mainly serve
citizens of country.
They focus on earning
profits.
Aim of this sector is to
serve mission and
work towards greater
specific work instead
of profits.
Raise money from It raises money from
public revenue such as
tax, duty, penalty and
so on.
They raise money
from issuing shares
and debentures as well
as from taking loan.
It raises money from
foundations and grants
from trusts.
Areas Agriculture, banking,
police, army,
education, health,
mining, transport,
telecommunication,
insurance etc.
Finance, technology,
mining, information,
transport, education,
pharmaceuticals,
construction,
manufacturing etc.
Charities, world
wildlife fund, social
welfare organisation,
Bill and Melinda Gates
Foundation. Trade
associations.
Benefits of working Retirement, job
security, allowances,
perquisites etc.
Good salary,
incentives, good salary
package, competitive
environment etc.
Higher workplace
morale, Self-
confidence (Kurzer,
2019). It helps in
counteract effects of
stress, anxiety and
anger.
Basis of promotion The foundation of the
promotion is seniority.
The basis of
promotion is Merit.
The foundation of
promotion is based on
performance of
voluntary organisation.
Job Stability Yes No Yes

The sector of public, private and voluntary have great role in increasing general business
perspective towards the UK economy. In general business, private sector without externalities
are turned into more beneficial in efficient job creation (Lee, 2017). The development of private
sector will raise by reducing government spendings but Private sector also required support of
public sector which deliver education, infrastructure investment and health care facilities.
Achieving sustainable and high economic growth is very complex and specific. The private
sector is referred as engine growth to boost UK economy because it drives productivity as well
as participation in the economic growth. They play greater role in economic development by
generating 90 % jobs and provide funds more than 60 % of investment. It will contribute 80 % of
the government revenue in the form of taxes, resources and income tax. They drive more sale in
essential services like banking, telecommunication, education and health. Private sector invents,
designs and develop products and services that boost economy of UK (Role of private sector to
raise UK economy, 2021). The public sector has great role in the economic development and
boost income of the people. This involve suitable maintenance in public services, shaping
economic institution, influencing attitude, influencing use of resources, fair distribution of
income and provision of basic amenities. Whereas public sector also created job opportunities by
the help of government which maintain stabilise employment level in education, health, roads,
policing, and armed forces. They stabilise effect of recessions towards disadvantaged regions.
The employment of public sector develops demand of other sectors like private sectors (Murphy,
2017). On the other hand, voluntary sector recognises demands of people and accomplish to
boost community of the country. They support employment rate with sustainable economic
development. The voluntary organisation performs activities which provide proper support to
raise community development. Hence, these three sector promote strong financial position of
country with employment creation, money circulation and much more that helps in improving
economy and equal distribution of income among citizens of the UK.
Question Three:
HR policies and its significance
There is great significance of HR policies in the modern workplace because it ensures
skilled employees by recognising their needs and provide them benefits. HR policies provide
training to the employees and assist them to boost their performance level. It will help employees

in providing fair amount of compensation in return of work contribution. The HR of fashion
creation can execute two main policies which enhance performance and profitability of
company.
Health and Safety policy- This policy consist safety and is the fundamental approach
which manage safety and healths of employees during workplace. It describes suitable course of
action to impact decision making regarding health and safety at workplace. and assist actions to
maintain healthy and safety working environment. It will define how employer will manage
health and safety of employees to promote productivity in the working environment (Stubbs,
2019). By appropriate implementation of HR policies, company can protect interest of
employee's health and safety. The health and safety policy is the ultimate backbone which
promote safe environment as well as compliances in the modern workplace. HR is responsible to
maintain health and safety environment in order to improve employees experience. This shows
commitment of HR in preventing harm, contribute safe working practices. Employees are legally
obliged for the safest and healthy work environment. The policies of company and procedure
execute federal compliances to protect employees from injuries and support them in case of
injuries emergencies of employees. When company fail to execute HR polices then they have to
face loss of productivity and skilled workers. So, it is essential for HR to regulate and follow all
health and safety measures. It will help in protecting interest of employees and retain best skilled
workers which raise competitive benefit of company. Health and safety boost confidence of the
employees and builds trust which support organisation objective.
Equality and diversity policy- The equality and diversity policy is the law which is
implement by the HR to reduce discrimination of employees at workplace. This law focus to
improve safest and inclusive environment to support workforce in the organisation. This will
help in promoting positive culture at modern workplace and increase abilities of employees
(Schell, 2021). HR policy of Equality and diversity includes fair treatment of employees
regardless of age, gender, race and other business ethics. The aim of this HR policy is to prevent
discrimination against employees and deliver positive working environment. The employees in
the modern workplace belongs to the different background so HR must provide them safe,
supportive and inclusive environment. This will help company in contributing synchronised
effort to update skills and talents. The policy of Equality and diversity reduce discrimination and
encourage actions of employees to deliver unique solution of business. By regulating equality

and diversity policy, company can enhance productivity and performance of workforce. Each
employee belongs to different background so by encouraging diversity and equality, company
can ensure productive value in the modern workplace. This will increase scope of innovation
and creativity at modern workplace because each employee have equal right and diversity
recognition which boost their morale and brings productivity in the operations.
Significance
The HR polices are integral part of modern working environment because it enhances
productivity and profitability of company. HR directly deals with the human resource and help in
decision making (by providing training and development) for achieving organisation goal (Van
Hoang and et.al., 2018). The policies of HR are the basic foundation which ensure employee
stability and positive work culture in the modern workplace. It will provide structure, control,
fairness and consistency in the modern workplace. The polices of HR provide appropriate
guidance to employees and management by resolving employment issues (work structure,
flexibility, benefits). It communicate suitable values and compliance with laws to protect
employment claims. Policies of HR, support transparency, fairness in the business operation
which boost morale and confidence of employees. The satisfied employees deliver unique
services and improve company brand name in front of audience. Polices are most significant at
modern workplace because it will reinforce and clarify appropriate standard to support employee
performance. It will help in managing staff with accurate manner and maintain balance of law
and legislation in the working practices of business. It develop positive working environment
which resolve work conflicts between management and employees. Company can maintain
competitive advantage by introducing suitable HR policies (Equality and diversity, Health and
Safety policy) in the business operations .
CONCLUSION
From the above report, it has been concluded that there are different legal statuses which
needs to be adopted by the company before commencement of business activities. Business legal
statuses has their own set of obligation and tax system while operating business activities.
Various sources of finance are available by the respective company to execute their daily
expenses. The Bank loan is most suitable source of finance for the company growth because it
charge low rate of interest. The private, public and voluntary sector increase UK economy by

developing employment ratio and circulate money in the competitive market. They support value
to the UK economy and enhance level of community by providing productive services. The HR
polices (health and safety, equality and diversity) are very essential which support modern
workplace by enhancing employee’s motivation and increase company profitability.

REFERENCES
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