The Structure of Business - Legal Statuses, Funding Sources, Sectors and Their Value in UK Economy

The report discusses the legal statuses of businesses, funding sources for start-ups, and the different sectors in the UK economy and their value. It covers the advantages and disadvantages of different legal forms of businesses, such as public enterprises, private entities, and partnerships. It also explains the benefits and drawbacks of funding sources like venture capital, bank loans, and angel investors. Lastly, it describes the primary, secondary, and tertiary sectors in the UK economy and their significance.

The Structure of
Business

Contents
INTRODUCTION..........................................................................................................................3
QUESTION 1...................................................................................................................................3
Legal statuses of business and their relative strengths and weaknesses....................................3
Evaluate the sources of funds which are available for the start- ups businesses together with its
strength and weakness..................................................................................................................7
QUESTION 2...................................................................................................................................8
Differences in sectors within the UK economy in which a business can operate. Their value
in economy of UK........................................................................................................................8
QUESTION 3.................................................................................................................................10
Policies regarding Human resources and its importance in the modern workplace..................10
CONCLUSION.............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business entails an enterprise which trades commodities or services in exchange for profit. There
are various legal forms a business could adopt such as partnerships, sole proprietorship and listed
or unlisted companies. Organization which do not operate for profit but rather for welfare of the
people can be public enterprises or charities. The report below will firstly bring out the
distinction between various forms of business, their liabilities and benefits. Secondly it shall give
an account of various ways through a business can infuse funds into its operations and their
relative benefits and drawback. Thirdly it shall provide an account of various sectors and their
value to the economy of United Kingdom. Lastly an account of various policies shall be provided
with regard to human resources which are needed to be framed by every business in order to
ensure compliance with various laws.
QUESTION 1
Legal statuses of business and their relative strengths and weaknesses.
Business connotes an enterprise or organization engaging in commercialized,
industrialized or professionalism spheres. The aim could either be to earn profit or for working
without profit keeping social cause as its goal. The businesses can vary in size, liabilities,
dissolution and legal status such as sole trader to multi national corporations. There are various
forms of businesses which are introduced as start ups, they are accounted for in the table below:
Character of
businesses
Legal position Advantage Disadvantage
Public
Enterprises: This
encompasses
those entities
which are manged
owned and
controlled by the
governmental
These public enterprises
could be classified under
three heads:
National: These are
operated and maintained
by the national goverment
The ambit of work covers
These entities work
for the benifit of the
people to upgrade
thier standard and
quality of life and are
responsible to the
elected
The long term plans
of these entites
suffer due to
temporary
goverments
changing thier plans
for short term

authorities. These
entities are not
made for profit
but rather have
societal benefit
and welfare of the
citizens as their
aim.
the entire nation.
State Based-These operate
within the particula
territory of a state within
the nation and are
controlled by the state
goverments.
Local- These buisness
operate at a local level
within a particular state
and the local authorities are
responsible for thier
management.
representaives.
-These entites
operate relatievely
indipendently and
have flexibility
while operating.
benifit of elections.
-These entities
operate without any
competition and
thus conduct
operations in a slow
manner. Also they
are known for
beaurcratic hurdles.
Private Entities:
These entities are
operated by
private individuals
for making profits.
As such they only
have the goal of
maximization of
revenues and not
the welfare of
people.
-Sole Traders- The
buisnesss is owned,
operated and managed by
one individual who infuses
the capital and reaps any
profit, in genral thier
operation are very
limited.Jones, (S.H. and
Talbott, 2021)
-The profits arising
out of the businesss
are kept by the sole
trader and do not
have to be shared.
-The mangement and
control over business
decisons lies solely
with the sole trader,
no other person has a
say in how to run the
business.
-The owner is
personally liable
from his own assets
to meet the
obligations of the
business.
- The buisness
operations come to
an end when the
trader goes bankrupt
or dies, the business
does not have a
identity of its own.
Companies- These entities
are distinct from their
owners and are considered
as body corporate. They
- The people who
own the company are
not personally liable
to pay off the debts
The company has to
divulge the profits
and losses to
shareholders. No

are considered as a
separate person under the
law. The registered entities
can bring claims against
someone or a claim can be
brought against the
company.
It could be classified under
two heads PLC(public
limited company) these
companies have their
shares listed at London
stock exchange meaning
the general public could
buy the shares of the
companies. Thereby the
company can fulfill its
capital requirements by
having its shares listed.
The other type is
LTD(private limited
company) the shares of
these companies are not
listed at London stock
exchange. To meet the
capital requirements it can
only turn to the private
individuals who own the
company.(CHEN, 2018)
incurred by the
comapny.
-Even if owners go
bankrupt or die the
existense of company
still is not threatened
unless the comany
itself goes bankrupt.
-Many experts could
be hired to run the
comapny in an
optimised manner.
individual
shareholder can
make decisons they
have to reach a
consensus.
- Companies have to
ensure compliance
with plethora of
rules and
regulations which
can be tedious in
additon to being
costly.
Partnerships- Two or - Different partners The partners are

more parties come together
with the aim of generating
revenue and sharing that
revenue along with losses.
(Whiteside, 2020)
could have thier
specialised streghts
in different fields
which when
combined turns into
strong buisness
running capability.
- The capital infusion
into the buisness is
shared along with the
losses.
personally liable
from thier personal
assets to meet the
obligations of the
firm.
-The profits have to
shared.
Limited liability
partnership- It neither a
company nor a partnership
rather a hybrid of the two
concepts. As LLP is
regarded as a body
corporate with it legal
existence distinct from
owners. Some partners
come together and register
the company.
-Winding up of
companies takes a lot
of time while
dissolution of LLP is
made through
deristring the
partnership on the
books of registrar.
-Partners are not
persoanlly liable
from thier personal
assets to pay off the
obligations incurreed
by the business.
-The company has
to publicly disclose
the information
regarding books and
other workings.
-The Llp would
come to end if one
of the members
wnats to dissolve or
dies.
Charitable
organizations:
These entities
don't operate for
profit but rather to
tackle some social
Trust created for charity-
The trustees run the
buisness which are get
appointed.
Association which are not
-The entities get a tax
break and other
benifits such as land
from the goverment.
Audit formalities are
-Compliance with
lot of rules and
regualtions have to
ensured.
-Since they have no
profits they can't

issue. They are
generally
exempted from
paying taxes.
incorporated: This also
works for the upliftment
and welfare of the people
however the specific reson
for working can be
choosen by the memebers.
not very much and
the societey beifits as
a whole due to which
thier trust is gained.
infuse capital into
entity and have to
depend on
donations.
The sources of funds which are available for the start- ups businesses together with their benefits
and drawbacks.
There are various ways through which start-up business can shore up its funds in UK.
These are provided below-
 Venture capital- Through this method the start up buisness can intake funds from the old
players in the market. In additon to providing funds they also provide relevant expetise
and the know how to navigate landscpe of business and earn revenues. They don't charge
intrest but however retain equity from the buisneses they invest in.(Röhm, 2018)
Benefit- The old players have extensive experience in the particular business and can provide it
with relevant exposure and connections. The funds can be acquired interest free and do not have
to be secured against any asset of the company.
Drawbacks- The equity or ownership is retained by the venture capitalist which means the
profits need to be shared with them. The owners of start up are constrained with how they spend
the money and the releasing of funds is tied to some condition such as performing up to certain
mark.
 Bank loans- The funds are secured without giving up ownership rights or equity rather
the bank charges intrest rate on the amount loaned and need repayment in regular
monthly investments. The fund is usually provided or dsecured against some asset of the
company or the business needs to have excellent credit ratings.(Apergis,Cooray, and
Rehman, 2022)

Benefit- The ownership need not be given away thus there is no dilution in profits of the
company. The loan is temporary arrangement which gets over when its paid back in full. The
interest can be accounted as deductions while paying taxes. The entrepreneurs are not
constrained in how they operate or spend their funds.
Drawbacks: The interests rate could be very high on bank loans. It has to be secured against
some asset. It is very tough to obtain or qualify for a bank loan. Lot of cash gets tied into paying
back the loan which could be used for opening new avenues for expansion of business.
 Angel investors- These are individuals who have lot of cash available and want to invest
early on in a business. They take equity in return for thier investment. Typically they
have connections and expertise which could benifit the company. Unlike venture
capitalist which are firms using funds angel investors use thier private money.(Sohl,
2022)
Benefit- If the right investor is investing this could mean that the start up gets expertise and
mentor ship from the investor. The funds do not have to be repaid. The investment is not secured
against any assets of the company. The investors take a long term view to recoup their
investments. Strategic guidance is provided by the investor in order to ensure optimized
operations.
Drawbacks: They require lot of equity to be given up, which means for future expansion there
isn't much left in terms of equity to get further investments. The investors typically dictate the
trajectory of the business. It takes a long time to find the appropriate investor who can secure
relevant connections and give the business specific advice and expertise.
QUESTION 2
Differences in sectors within the UK economy in which a business can operate. Their value in
economy of UK.
Businesses operate in three different sectors to offer commodities and services to people
and earn revenue. Any business have to obtain inputs and through production change them into
outputs. The three sectors are provided below.

 Primary sector- This sector concerns itself with extracting raw material or naural
resouces from the Earth. Any enterprises which uses Earth to grow food or Filter out
materials from the Earth is considered to be in primary sector. For instranse Agriculture,
mininng operation to extraxt oil, precious metals, forestry and fishing. This sector serves
as the foundational aspect upon which the rest of the sectors are built. Although due to
rapid advancements in tech this sector as been on the decline in recent times.(Timuno,
and Eita, 2022)
 Secondary sector- This sector turns the goods from the primary sector into finshed goods.
Its also known as the manufacturing or the industrial sector. This sector has made huge
strides due to industrial revolution which meant people were no longer needed to perform
manual work. This trend of innvolving less people has continued in present times whenin
machines and robots are used for the entire production process. The examples of this
sector innvolve automotive, textile, constrction companies, food processing
companies,engeneering comapnies.(Revathi, and Aithal, 2019)
 Tertiary sector- Also known as the service sector, this employs the highest number of
people in the econmy of UK. This sector is innvolved in taking skilled and talented
workers to provide intagibel materials ie services. In contrast to manufacting or
secondary sector this sector doesn't sell material commodities. The examples of this
sectors are mangement, data collection, consultaions, sales, communications and lot of
other services.
Grounds Primary Secondary Tertiary
Meaning This sector is involved
in extracting natural
resources or materials
from earth.
This sector concerns
itself with conversion
of resources into
finished tangible
commodities.
Produces intangible
commodities also
called as the service
sector.
Working Uses traditional It is organized and Highly organized

methods an is largely
not organized rather it
is scattered.
uses technology for
operating.
utilities modern
logistics and
technology.
VALUE IN UK ECONOMY
United Kingdom has a 2.8 trillion dollar economy and ranks sixth in the world measured
according to GDP and ranks 9th in the world according to purchasing power parity. The sectors
heavily relied upon by the economy are services, Secondary or manufacturing, tourists sector and
the construction sector. Service sector prevails in economy of the United Kingdom according to
Office of national statistics. This sector alone accounts for 80 percent of its economy.
Specifically the finance service contributes a large chunk. The primary sectors and secondary
sector are dwarfed by comparison accounting for a meager less than 1 percent in case of primary
sector and Approximately 18 percent for for the secondary sector.
A meager one percent of the workers are employed through the primary sector, while 19
percent of the workers are employed in the secondary sector and 80 percent are employed by the
tertiary sector. From the above statistics it can be deduced that primarily UK is dependent upon
tertiary sector and then on secondary sector and primary sector' contribution is nominal.
QUESTION 3
Policies regarding Human resources and its importance in the modern workplace.
Human resources have assumed a paramount role in any enterprise in modern times, The
employees of human resources assists the company in matters pertaining to recruitment, payroll
management, administering policy, perks or terms of employment. They also act mediums
between the employees and the managers in order to safeguard the rights of employees or make
them aware of their duties. These policies are focused on ensuring compliance with the rules and
regulations pertaining to the employment law. In conjunction to the hiring process they also
assist with the process of termination and ensure maximum productivity from the employees.
(Trost, 2020).
Policy regarding equlity:It is very essential for the companies to conform to the various laws so
as to not incur huge litigation costs and fines. In the UK every company has to conform to The

Equality Act 2010 Which among other things prescribes certain protected characterstics such as
age, race, sex, gender, nationality etc. If some one has these characterstics they can't be
dicrimanted against. The law also stipulates that a person who is asssociated with the person who
has protected characterstics also can't be discriminated against. Further if someone asserts thier
rights under the Act then they can't be victimesed for assertion of such Rights. These rights
pertain to employees being hired, fired, training, professional development, or
promoted(Oldridge, 2020)
A private entity could only be allowed to discriminate when they are making positive
discrimination. In plain words if an Enterprise want to uplift a certain section of people whose
characteristics are protected they can do so without incurring any penalties from the Act.(Singh,
2019.)
Policies of an organization are made in order to ensure compliance with regulations at
work. The policy of inclusion of variety of people to promote diversity and treating them at same
pedestal ensures that everyone who is talented and skilled can access opportunities of work.
These policies promote the well being of employees and ensures maximum productivity. The
employees can solely focus on the achieving the objectives of the organization without being
bullied, harassed or diverting their attention to ensuring their well being at the workplace.
Health and safety- Enterprises need form a policy for ensuring compliance with Health and
safety Act as each and every sector needs specific safety measures to be taken. For instance the
labs and hospitals need a very high degree of diligence while conducting operations, as they have
to safely dispose of hazardous materials and ensure that no contaminants are present at
workplace. Similarly ordinary offices may not require that high degree of safety compliance,
they only need to ensure fire safety and that their equipment such as computers do not pose any
risk to employees by maintaining them.(Richards,and Sang, 2021)
Each company owes a duty of care towards the visitors as well in conjunction with employees.
Adequate safety equipment needs to ensured if the employees are working in especially
dangerous environment. If a company can't show that it took reasonable steps to mitigate risks
which propped up during assessment which also have to be conducted according to the law, then
the company would be liable to pay hefty fines to the claimant. Health and safety is one of the
top priorities of any organization as the workers are the most important asset a company has.

(Dabrowska-Miciula, and Lima, 2020 ) Moreover proper steps towards health and safety
ensures productivity as the employees can be relaxed and don't have to fear for their safety, The
skilled employees can also be retained whereas if the company doesn't keep the safety of its
employees in mind the employees would be leaving for other companies. The duty not only
pertains to the employer but also employees as they are also responsible to ensure that they do
not create safety risks by not ensuring to the prescribed code of safety.
CONCLUSION
It can be concluded from report above that in the United Kingdom there exists various structures
of business that differ in their legal statuses. Their aims and objectives are determined by what
variety of company it is, whether it works for the welfare of the people like public company or
registered charities or for revenue maximization like sole traders,partnerships and private
companies. The difference in the registration determines whether it can borrow money from
public like the listed companies at London stock exchange ie Plc or company is funded by
private investors like the case of Ltd companies. The benefits and liabilities of the owners
together with dissolution procedure determines what variety of business is best suited for a start
up. Further an account of various source of funding are provided such as Angel investors, capital
ventures and bank loans in conjunction with their relative benefits and drawbacks. There exists
three types of sectors in the economy of UK out of which the tertiary sector employs the majority
of people and accounts for a large chunk of its GDP. Every enterprise must have specific human
resource polices to ensure compliance with various provisions of different enactments such as
The Equality Act and The Health and Safety Act.

REFERENCES
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