Different Legal Statuses of Businesses and Sources of Finance

This report discusses the different legal statuses of businesses, including sole-tradership, partnership, private limited company, public limited company, and charitable incorporated organisation (CIO). It also covers the strengths and weaknesses of various sources of finance, such as personal savings, bank loans, venture capital, and crowdfunding. The report provides valuable insights for entrepreneurs looking to start or expand their business in the UK economy.

The structure of
business

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Different type of legal statuses of businesses and strength and weaknesses of these legal
statuses.........................................................................................................................................3
Question Two...................................................................................................................................6
Identify the strengths and weaknesses of sources of finance......................................................6
Question Three.................................................................................................................................8
Identify sectors within the UK economy in which a business can operates...............................8
Question Four................................................................................................................................10
Identify HR policies and comment on their importance to the modern workplace...................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
As business is referred as the legal structure that is involved in different activities and functions
such as professional, industrial and commercial activities for the purpose of gaining profitability
and for some charitable objective as well as for specific social cause. Business structure plays
important role in making the business functions legal as well as influenced the daily operations.
Business can adopt the any structure according to organisational structure and operations such as
partnership, limited liability company, corporations and sole-proprietorship that facilitates the
organisation to run all business functions efficiently. In the pandemic of covid-19, entrepreneurs
face various challenges and problems to start business or expand its operations in UK economy.
After the pandemic of covid-19, it becomes very challenging for an individual to start business in
the economy of UK (Alič, 2018). There are various rules and regulations are formulated by the
government of UK in order to support new start-ups through launching various schemes to
provide finance. The report covers various topics such as different legal status that are adopted
by the business to perform their operations, different sources of finance through which
organisation can fulfil finance need to start business. Apart from that, different sectors of UK
economy in which organisation can operate their functions, HR policies and their importance is
being mentioned in this project report.
TASK
Different type of legal statuses of businesses and strength and weaknesses of these legal statuses
There are various legal structure under which all business functions are performed and it
impacts on business operations as well. Owner of business evaluate all business structure and
adopt the most suitable one to attain defined objectives. Some of legal statuses are mentioned
below:
Types of legal
structure
Meaning Strengths Weakness
Sole-tradership Sole-tradership is referred as the
specific legal entity that
ownership is in the hand of
single owner and the owner is
liable to perform all functions
The strengths of
business is that there
are no more legal
formalities are followed
by the owner and it
The business contains
unlimited liabilities that
means owner is liable to
settle organisational
debts from personal

and activities. The structure
consists unlimited liabilities
because single owner is
responsible for organisational
profits and losses. There are less
set of actions are followed by the
owner to run business operations
and he is liable to pay
organisational debts by personal
assets.
requires low investment
to stary business and
perform all operations.
There are no need of
professional accounting
and auditing that reduce
overall cost of
organisation (Andreini,
and Bettinelli, 2017).
the owner has right over
the whole business and
profit is being earned
by himself.
assets and the owner face
various challenges due to
lake of skills and
resources because whole
business is managed and
operated by an
individual. Sources if
fund and business
expansion as well as
other decisions are taken
by the sole- trader that
affect the overall
functioning.
Partnership The concept of partnership is
determined as the formal
agreement among all partners
who are agree to run business
together for the purpose of
gaining profits. The agreement
consists all information, terms
and conditions of partnership
and guide to perform all
operations in well-defined
manner. Profits and losses are
shared among partners on the
ratio of their capital and
determined ration that is
mentioned in the partnership
deed.
There are fewer
obligations and
regulations are followed
by the partners to
stating up the business.
As there are number of
partners are involved in
the partnership firm
who bring skills,
knowledge, resources
and capital that help to
run business and the
loss is being distributed
among all partners.
In partnership firm,
partners have unlimited
liabilities that impacts on
their personal assets as
well as all decisions are
taken after consulting to
all partners that take too
much time and because
of it business can loss
various opportunities of
growth and development.
There are limited
development is found in
the partnership that cause
turnover of partners.
Private limited
company (LTD)
Private limited company is
defined as the legal entity that
It is the separated entity
that contains
There are various
disadvantages of private

pertains own legal rights. All
organisational activities and
functions are managed and
performed by the shareholders
and business run by the directors
of company. The business
contains their own legal rights as
well as obligation and having
separated ownership form its
members (Balocco, 2019). The
private limited company is run
in two form such as company
which is limited by share, that
means shareholders are
responsible for their investment
amount and the other one is
company that is limited by
guarantee that is stand for
members if company provide a
nominal amount at the time of
winding up of business.
independently taxed
and limited liabilities
and it is formulated
under recognised legal
contract or structure.
It is the strengths of
business that company
can transfer share as
well as it can raise fund
through venture capital.
There are various
expansion opportunities
for the business through
granting loan from
banks.
limited company requires
to fulfil various legal
formalities to starting up
business and shares are
not treated in stock
exchange.
Shares of companies are
not offered to public as
well as there are many
restrictions to transfer
shares. There are
requirements of
professional knowledge
to operate business
operations.
Public limited
company (PLC)
Public limited company is
referred as the parallel to private
limited liability company. In
public company, offers
organisational shares to general
public. Respected company is
registered in the stock exchange
and trading of shares are done by
recognised bodies. It is required
The strengths of public
limited company is that
the business can raise
capital by issuing the
share in general public
for the purpose of
attaining growth and
expansion opportunities
as well.
There are different legal
rules as well as
regulations are
performed by company
to run business
operations. There are
high transparency as well
as funds are required to
starting the business.

for the company to issue
minimum amount of £50,000
shares before registering the
company.
In this company, shares
are transferred to
general public that raise
organisational funds.
Charitable
incorporated
organisation (CIO)
The Charitable Incorporates
Organisation is referred as the
entity which is operated for
specific social cause (Fedorenko,
and Berthon, 2017). The
business structure is different
from other charities that are
formed as limited company or
registered in charitable
commission as well. CIOs are
registered in charitable
commission.
The organisation is
protected by the
personal liability as
well as government
provides various
financial and taxation
benefits to the
organisation for
perform all function
properly.
There are various
drawbacks of charitable
organisations such as it
has limited funding as
well as having higher
social pressure.
It contains subject to
public scrutiny so, it
must disclose all
financial statements to
general public.
Question Two
Identify the strengths and weaknesses of sources of finance
Finance plays important role in establishing as well as expanding business in specific area.
As in business finance is required to purchase various organisational items like building,
furniture and machinery to run business activities and functions efficiently (Kolk, Rivera-Santos
and Rufín, 2018). There are various sources of finance are available for the business through
which finance is gathered to operate business functions. Business can get required finance from
internal as well as external financial sources for the purpose of starting up business or expensing
it into business areas. Some sources of finances are mentioned below:
Personal savings: It is referred as the saved amount or personal investment of
entrepreneur which is bring by the owner, business partners and shareholders to establish
business or performing necessary function and activities. In the process of establishing new

business, high amount of investment us required so, the entrepreneur bring their own personal
savings in various forms like real estate, financial funds as well as stocks. There are various
options are available such as selling personal assets or lend money on these assets for the
purpose of establishing new venture. Investment of personal investment reflects the entrepreneur
have long-term commitment with the project and he is ready to take risk as well. Sone strengths
and weakness of personal investment are discussed below:
Strength: It helps the business entrepreneur for running business daily operations
properly. There is no more legal formalities are involved in personal investment so, entrepreneur
no need to fulfil lengthy paper work and borrow money from any external sources that saves
time. cost and efforts to get required amount of finance.
Weaknesses: As personal saving or investment is not a better option for acquiring the
higher amount of finance to perform large business operations that limits its effectiveness. There
are no legal agreement is being prepared for personal saving so there are always a possibility that
owner demand for funds on short notice periods which affects the organisational operations and
flow of cash.
Financial institutions: Financial institutions are the popular source of finance for business
that provides required finance for the purpose of establishing new business as well as expanding
its operations in another areas (Köseoglu, Yildiz and Ciftci, 2018). Through applying loan
business get funds from any financial institutions. For acquiring finance, business entrepreneur
must fulfil some legal requirements or meet eligibility criteria that is being issued by bank. There
are long-term loan is provided by the institutions to run business operations at large scale.
Strengths and weakness of getting finance from financial institutions are mentioned below:
Strength: Getting funds from different financial institutes is beneficial for the business
because the institutes provide large finance for long period on reasonable interest rates that help
organisation to reduce overall business cost. On specific period of time the amount is repayment
to the institute.
Weaknesses: For acquiring the finance, business give some assets to institutes as a collateral
security and the amount is being repaid after a specific period of time which mentioned in the
lone agreement (Matemilola, 2018). As there are fixed interest rate is paid on lone that creates
burden on business.

Bank loans: Bank loans are most common source of funding for business that provides the
required amount of finance to business on specific interest rate and amount is repayment of bank
after particular period of time. Government started various policies through banks to provide
finance to business for establishment (Nisula and Pekkola, 2018). A specific amount of money is
loaned from bank at particular interest rates on defined collateral security for a defined specific
period of time.
Strength: Bank loan is cost effective option for business as it provides funds in lower interest
rate as compared to other sources. There are various tax benefits are provided on bank loans as
tax is deductible on total loan amount and it help business for retaining the profits as well.
Weaknesses: There are long and complicates legal procedures is followed for acquiring
required amount of finance, paperwork is being competed that takes too much time and efforts.
To take funds from bank, business provide collateral securities and requires high credit score.
Bank provides loan on the basis of credit score and contains high interest rate.
Question Three
Identify sectors within the UK economy in which a business can operates
In the economy of UK, different sectors that are growing and developing at very fast rate in
which business operate its functions and other operations. There are various sectors like
manufacturing, construction as well as agriculture that plays important role in growth of UK
economy. Sectors of business are mentioned below:
Manufacturing sector: It is the most effective sector in UK economy in which business
operates various functions as well as operations. There are various activities are included in
manufacturing business sectors that is related to converting specific raw material in finished
products that contains value for customers and served in the market of UK for the use of
customers. In manufacturing sector different industries running their functions for the purpose of
gaining higher profitability objectives such as wood industry, leather and electronic industry,
food and transportation industry as well as petroleum industry (Ode and Wadin, 2019). All these
industries produce specific products in factories through utilising latest machinery and
technology to sell in market. Manufacturing industry help to UK economy by providing
employment, 12 billion employees are hired in the sector that facilitate in growth and
development of economy. The manufacturing sector is quite different from the agriculture as

well as construction industry in terms of operations and functions. The respective industry focus
on producing quality products to satisfying needs and demands of customers. There are high
investment is required to establish as well as perform functions efficiently.
Agricultural sector: Agriculture business industry is referred as the effective sector that
consist range of functions that contribute in growth as well as development of UK economy like
producing food for the purpose of breeding human and animals and cultivating the land through
producing variety of grains. Agriculture sector is continuously developing provides various
opportunities of employment that help growth of business. Now these days, different modern
technologies are used in agriculture functions that help enhance productivity and profitability of
area. It creates effective ecosystem that help gain higher gross domestic production that
contribute in the national income of industry. Farmers in agriculture sector perform various
functions like producing better quality agriculture food for the purpose of exporting them to
other country to gain higher profitability ratio (Pagano, Petrucci and Bocconcelli, 2018). There
are high quality fertilizer and pesticides and technologies are used to enhance total production
rate. In UK Cargill as well as Minneapolis are such large companies that are involves in
agriculture functions.
Construction industry: Construction industry is referred as the business sector that consist
various functions like prepare designs of construction sites, develop and maintain the
infrastructure. The respective industry is divided in different business sectors like general
constructions, heavy and specialised construction that consist different business functions on the
bases of business size as well as nature. Heavy construction consists constructing bridges, roads
and general construction includes development of various residential places and real States.
Specialised construction involves the functions of developing wood and electrical things. Now
these days different modern technologies are used in designing as well as constructing modern
buildings that help to reduce organisational cost and perform in well-defined manner for the
purpose of completing construction work on time. To operate business at construction sector
high investment is required for purchasing material and technologies as well as installing them.
There are number of employees are worked at construction sites so, it becomes difficult to
communicate as well as manage them properly (Randhawa, Wilden and Gudergan, 2021). So,
organisation use BIM process and techniques to handle employee problems and conflicts. The

respective sector plays important role in growth and development of economy of UK and
facilitates it to enhance GDP level.
Question Four
Identify HR policies and comment on their importance to the modern workplace
Now these days different HR policies are used at modern workplace that facilitates business to
accomplish defined goals and run all business functions efficiently. Business conduct properly
research and evaluate the latest trends and update organisational policies for the purpose of gain
competitive advantages. Business emphasis on policies for resolving different conflicts that
enhance the effectiveness of workplace and protect business from various external impacts.
Organisational executives implement various human resource policies to maintain balance
between internal as well as external business factors (Sheppard, Yeon and London, 2018).
Through HR policies, business can manage employee training programmes, ethics and employee
diversity at workplace properly. Business implements defined code of conduct, series of
applications and effective procedure to running business efficiently. Different HR policies that
are implement at modern workplace are discussed below:
Equality and Diversity policy: As in business number of employees are perform various
functions who come from different cultures as well as backgrounds so, organisation implement
various HR policies such as equality and diversity policy in order protect employees from any
discrimination and misconduct on the bases of nationality, gender and age and treat them
equality. Employees consider organisational prospectus that contains information related to
organisation policies like diversity, equality and inclusion that attract them to work with
business. Diversity and inclusion is considered as the most significant policies which facilitates
the organisation to enhance performance as well as retain them with organisation. Business
implements various policies in order to protect them from any kind of misconduct. Organisation
creates various comprehensive policies and strategies that facilitates through hiring appropriate
candidates to gain various competitive advantages than other competitors (Shuen, 2018). These
policies help to enhance employee morale by implementing equally values, beliefs, pay and
equal rights the provides various opportunities of growth and development of employees.
Health and safety policy: Business executes different human resource policy at workplace
such as health and safety policies that creates effective and positive working environment and

enhance performance and productivity of employees within organisation. In the pandemic of
covid-19 business follow all government regulations and implement safety protocols for
protecting employees form any kind of hazards. There are specific standards are executed by the
implemented for protecting wellbeing employees (Sohl, Vroom and Fitza, 2020). Conflicts and
violence at workplace linked with employee’s health and security that must be resolved by the
organisation to satisfy them.
CONCLUSION
As per the above, it can be concluded that there are various types of business structure that
help to run business and perform various functions as well as operation to accomplish defined
goals and objectives efficiently. Business can choose from sole-tradership, partnership, provide
and public limited companies according to organisational functions and strategies. Each business
structure has various strength and weakness that impacts on organisational functions so,
entrepreneurs evaluate all structure than implement the appropriate one that help to attain
business objectives. As there are funds are required to establish and expending business.
Business identifies the source of finance and acquire funds from effective and suitable sources.
In the economy of UK, different sectors are conducting in which various business are operates
their operations that contribute in growth and development of economy.

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