Business Structure and Sources of Finance for Startups

THE STRUCTURE
OF BUSINESS

Table of Contents
INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
1. With help of a table, demonstrate the various types of legal statuses of a business that may be
adopted by the startup. Also highlight the strengths and weaknesses of each legal status.................3
2. In aspect of the business idea, Describe and analyse the strengths and weaknesses of the various
sources of finance that can be adopted by the startup........................................................................6
TASK 2.................................................................................................................................................7
Identify the various sectors that fall under the economy of UK where the businesses can operate.
State the difference between the three sectors. Explain the contribution of each sector in the
economy of UK.................................................................................................................................7
TASK 3.................................................................................................................................................9
Identify the various Human Resource Policies and their significance in the modern work place......9
CONCLUSION...................................................................................................................................10
REFERENCES....................................................................................................................................11

INTRODUCTION
Business Structure is referred to the legal structure that is followed by an
organization. The business structure can be recognized as per the jurisdiction. The business
structure of an organization highlights the activities that the organization is going to operate
in the life course of business. The business structure reflects the obligations of the business
that need to be followed along with the capital raising sources that can be adopted by the
business. The business structure decides the tax structure that the organization is liable to the
tax authorities. It is very important for the organization to choose an appropriate legal
structure which must be decided as per the needs, goals and objectives of the organization
(Ali and Anwar, 2021).
There are various kinds of business structures such as sole proprietorship, partnership,
Limited Liability Corporation and corporations. The study revolves around the business plan
of a startup wherein the entrepreneur is planning to establish a startup. In order to establish a
startup the entrepreneur needs to have knowledge of various factors such as various modes of
business structure, various sources of business finances and various Human resource policies
that are important in aspect of the startup (Baker, Kumar, and Pandey, 2021).
TASK 1
1. With help of a table, demonstrate the various types of legal statuses of a business that may
be adopted by the startup. Also highlight the strengths and weaknesses of each legal status.
There are various types of business structures that the startup can choose from in
order to attain a specific legal structure for the organization. The various kinds of business
structures along with the strengths and weaknesses are explained below-
Serial
no.
Type of business
structure
Strengths Weakness
1. Sole Proprietorship  Low cost and
feasible
 Various tax
deductions
 Lacks separate
legal identity
 Lacks expertise
in various fields
2. Partnership  Less regulations and
obligations of
business registration
 Partnership deed
reduces chances of
conflicts
 No safety against
person assets
 Probability of
conflicts
3. Limited Liability
Corporation
 Lesser formalities
during registration
 No restrictions upon
number of
shareholders
 Complex
registration
process
 Needs to hire a
professional
accountant
4. Corporation  Various modes of  Complex

raising finance
 Security against
personal assets
registration
process
 Delayed decision
making
 Sole proprietorship- Sole proprietorship can be considered as the easiest business
structure that can be adopted by the various startups. In this kind of business structure,
only one person is the in-charge for all the operations and decision making that takes
place at the business. In sole proprietorship business structure the income and
expenditures of the business are termed as the incomes and expenditures of the
business in terms of the taxation policies. Hence the business does not need to file
separately for the taxes (Barbu, Bratu and Sîrbu, 2018).
Advantages-
 The sole proprietorship business requires feasible and low cost finance to plan a
startup. It requires minimal fees of registration for a sole proprietorship. In
majority of the cases the registration cost consists of only license and taxation
fees.
 Business owners are eligible to have tax deductions such as health insurance and
the decision making is quite quick as only one person is the sole authority in the
organization.
Weaknesses-
 The business does not have a separate legal entity and in this case, the liabilities
are paid from the owner’s side in case of dissolution of the firm.
 In the situation of a sole proprietorship the business may lack the professional
expertise in various fields as a single person might not be capable to perform well
in all the fields.
 Partnership- Under the business structure of partnership, the organization comprises
of two or more people who join hands in order to generate and share profits and also
compensate for the losses together. The partners in the partnership mode of business
bring capital and also receive interest on capital as per the agreement of the
organization. The partnership business consists of an agreement that is duly signed by
all the partners and is called as a partnership deed which specifies the details that are
required in the operation of the business throughout the phases of the business. The
business structure consists of various advantages and disadvantages. The various
points are discussed below
Advantages-
 It requires very less obligations and legal regulations. The registration process of
partnership structure consists of very little paperwork (Belas, Gavurova and Toth,
2018).
 The partnership deed saves the business from the conflicts that might occur in
future among the partners.
Disadvantages-