Structure of Business

This study provides comprehensive information on diverse business legal structure in UK and with its strength and weaknesses of the legal structure adopted by the business, data regarding different monetary sources of the business with its sources adopted by the business startup having relevant strength and weakness and the three different sectors of the UK economy and their differences.

Structure of Business

Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
Question 1..................................................................................................................................3
A- Various legal statuses of business with its strength and weakness.............................3
B- Three sources of finance with strength and weakness.................................................5
Question Two.............................................................................................................................8
Identify three sectors within the UK economy in which a business can operate...................8
Question 3..................................................................................................................................9
HR Policies and importance...................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

INTRODUCTION
The startup business idea comes in the mind of the entrepreneur with innovative and
resources that turn into a foremost motive contributing new business startup. The
entrepreneur in the business is one who has the capability, skills and talent. Intended for
corporate startup it needs to recognizing the resources which involves defining the legal
business structures, the sources of finance, and different human resources. In which
categorizing the monetary necessities in directive to fund all the desirable business strategies,
segmenting the business into legal structures and executing the satisfactory policies in
demand to create the identity of the business in the marketplace (Adrodegari, F. and et.al.,
2017). This study provides comprehensive information on diverse business legal structure in
UK and with its strength and weaknesses of the legal structure adopted by the business, data
regarding different monetary sources of the business with its sources adopted by the business
startup having relevant strength and weakness and the three different sectors of the UK
economy and their differences. In study it has been also defined different human resources
policies and their importance in the workplace. The chosen business startup is NAIL SALON
which is a beauty salon offering several services like manicures, pedicures, and nail
enhancements to the customers. The varieties of options in the nail salon provided involve
acrylics, silk or fiberglass wraps, French manicures, polish, and pedicures to the UK
customers to enhance their beauty.
MAIN BODY
Question 1
A- Various legal statuses of business with its strength and weakness
The activities of business are alienated as per the nature of the legal statuses of
businesses. These are mainly separated into diverse business sectors such as public limited
company, Limited company and registered charity. The discussion is below-
Public limited company Private Limited company Registered Charity
Public limited company
(PLC) defines those
business in which company
shares is offered to the
general public and traded
The limited liability
company comprises the
private limited company and
the public limited company.
In the private limited
When a person or
association of persons is
proposed to be registered as
a limited company under
this act for charitable objects

freely with a minimum share
capital of £50,000 over
which 95% of the limited
companies in UK are public
limited companies.
The strength of the
companies is it is easy form
to raise the capital. The PLC
has the separate legal entity
from the owners and the
other shareholders of the
business. The capital can be
raised through public
deposits, acquisition by
offerings shares which leads
to the opportunities of the
expansion and growth.
The weakness for the public
limited company is the
owner lose the control over
different business. In
protecting the shareholder,
the legal and regulatory
requirements is high. The
initial financial commitment
is high in PLC in which 25%
is paid-up.
company, there is a
prescribed minimum paid-up
share capital restricting the
rights to transfer the shares
and having limited number
of shareholders up to 200
whereas the shareholders
does not have any control
over the business activities.
The company profits are
divided and distributed
between the shareholders in
the form of dividend
(Bashir, M.and et.al., 2019).
The advantage of the
private limited company is a
separate legal entity which
does nit require minimum
capital. The funds can be
raised from venture
capitalists or angel investors.
The financial burden is
reduced due to unlimited
shareholders and liability is
been divided into different
shareholders.
The weakness of the private
limited company restricts
the transfer ability of the
shares and prospects cannot
be issued to public. The
shares cannot be quoted in
stock exchange. The director
of the business is held liable
and registered in the limited
company if central
government is satisfied with
the objects and intentions.
After that license is issued to
the person. The registered
company will be known as
charitable company.
The strength of the
charitable organization gets
huge relief from the taxes
and have public recognition
by earning the trust of the
society. The funding of the
capital is raised from
different sources having
charitable status.
The weakness of the
charitable organization is it
faces the restrictions to carry
out various activities and
required to comply with
regulatory requirements
framed by the UK
government. The capital
cannot be raised from equity
investments. The payment to
the trustee is for the supply
of the professional service is
prohibited unless the
constitution of charity and
charity commission
authorizes to pay with this
requires detail explanation

for the insolvency of the
business.
(Bukair, A.A.A., 2019).
B- Three sources of finance with strength and weakness
There are diverse sources of finance contingent upon the nature and the time period of
obtaining the reserves. The different sources of funds contain the affluent and inexpensive
funds with the internal and external sources of funds. The sources of the funds are separated
into three segments comprising of short-term sources of finance, the medium-term sources of
finance and the long-term sources of finances based on time period. In directive to finance the
business activities of Nail salon the financial sources of the business are discussed as below-
Short term sources of finance
It is a credit facility given to the firm for less than one year involving operating
expenditures which needs day-to-day activities. It shapes the gap among short term expenses
and income.
 Bank credit- It is the most important source of financing working capital requirements for
the nail salon and gets the financial support from different financial institutions. It offers
the loan to the individuals (Frey, M and et.al., 2017).
Strengths: It is a conformist source of funding which is informal to acquire the loan and
credit is not repayable on the demand providing fixed rate of interest. It also provides
flexibility to meet the short-term deposit requirement of the business.
Weakness: It rises the liability which requires the terms and conditions to be fulfilled to
acquire large loans and creates suffering in reimbursement mains to cash flow problem.
 Trade credit- It is a short-term sourcing of the financing for nail salon in order to acquire
the goods from the supplier with immediate paying of cash. It is account payable credit
drawn on purchase made by the customer. It is an informal arrangement granted on open
account basis.
Strengths: It is easily available to the small firms providing flexibility helping in the
growth of the firm sales.
Weakness: The risk is faced by suppliers and buyers in terms of quality, or mitigate,
transportation etc. It involves the complications in understanding the terms and conditions
(Gao, H and et.al., 2017).
Medium term sources of finance

The credit financing facility is given to the firm for a period of three to five years
when the long-term capital is available and deferred revenue expenditure are made. The
sources of finance are-
 Borrowing from banks- The Borrowing from the bank benefits to distribute financial
solution to business for both medium- and short-term sources of finance. Wherein, nail
salon receipts the monetary funding from dissimilar financial institutions for the term of
3-7 years which is also named as term loan or demand loans. The financial institution in
UK carries the financial support offers the loan to the business through or without any
security.
Strengths: The interest on debt is tax deducted and lenders are paid principal and interest
amount. It is a Prodigious way of meeting the financial requirements of the businesses.
Weaknesses: The firm is indebted to reimbursement fixed interest and principal amount
which can primes to insolvency. It increases the financial leverage which rises the cost of
equity to the firm. It is an expensive method for the loan amount (Le, T.P.V. and Phan,
T.B.N., 2017).
 Lease financing- Lease financing is significant method in demand to encounter the
financial requirement of Nail salon business in which the business obtains the property
and other fixed assets on lease by compensating the monthly rentals for a definite period
of time. As Nail salon is a startup company therefore, obtaining the valuable fixed assets
of the business benefit to decrease the financial load of the company and meet the
business requirements. Strengths: Its proposals fixed rate funding. It provides probable
tax assistances dependent on in what way the lease is organized. The lease financing
benefits in meeting the financial necessities of the business and decreases the charge for
obtaining the fixed assets.
Weaknesses: Lease cannot be terminated previously the original term is completed. The
possession of the lease financing is not transferred to the owner which is still responsible
to maintain the property and equipment as per the specified terms of the lease.
Long term sources of finance
It has a significant part in the financial management of the business describing the
credit facility provided for more than five years. This source of finance is obligatory to
accomplish the long-term liabilities consist of fixed capital required for investment in fixed
assets. The sources are- (Lee, K.U., 2019).

 Loan from financial institution- A number of financial institutions has been set up by the
government with the prime object of promoting business development. The loan from
financial institutions supports the business to meet the financial resources for long time
period with huge amount. The business gets the support at cheap and affordable rates
from various financial institutions. The Nail salon take the help from financial institutions
in UK to serve the financial needs of the business.
Strengths: The interest is tax deductible and companies have the full control on the
company. It supports to help the business by meeting the long-term financial
requirements of the business and goodwill is increased of the borrowing company in the
capital market.
Weaknesses: The financial burden is increased on the business providing high interest
rate for the loan taken. The loan taking requirement is very time consuming as it comes
under government criteria which follow rigid rules to grant the loans (Loon, and et.al.,
2020).
 Government grants- The UK government distributes financial and non-financial funding
to the corporate in UK, in directive to encourage the economic development of the
businesses. Nail salon takes the support of the governmental grants that benefits the
commercial to bring business growth resolution to the recognized difficulties challenged
by the business and yield the assistance of the financial support brought by the UK
government.
Strengths: The primary benefit of the government grant is the easy and convenient way
to meet the financial requirements of the business as the business is not obliged to pay
back and provides large range of funding.
Weaknesses: the criteria of the government in granting the funds are strict which
becomes difficult in access requires a solid and convincing business proposal. The grants
are offered on the attached polices and the money is used for the initial plan by complying
the rules.
 Retained earnings- Retained earnings are termed as internal sources of financing for the
business activities. Retailed earnings are also known as the undistributed profit. It is a part
of the ownership of the capital of the company. The business maintains the reserves set
out from the profit used for the business expansion. Nail salon make the use of this
approach by retaining the profits in the terms of the reserves in order to meet the further
business requirements (Pagano and et.al., 2018).

Strengths: it is a cheap source of financing without involving any acquisition cost. The
retained earnings provide the strength to the business financial position and stability
which upsurges the market value of the shares.
Weaknesses: There is an improper utilization of the funds if properly not stated retained
earnings which leads the reduction in the business profitability and productivity. The
shareholders of the business are not permitted to enjoy the full benefit of actual earnings
of the company.
Question Two
Identify three sectors within the UK economy in which a business can operate.
The revenue and economic development are built by the different business sectors in
the economy of UK. These primarily comprises the primary, secondary, tertiary which
contains diverse corporate activities in directive to encourage robust economic development.
The different business sectors carry input and output to add the value in the economy. The
primary business sector comprises primary activities of industries such as provided raw
material to further businesses, The manufacturing and production activities is comprised by
secondary business sector. The intangible assets and services delivered to the customers
contains tertiary business sectors. The three sectors of the economy are- (Randhawa, K and
et.al., 2021).
The primary sectors are also known as extraction sector due to raw material is
acquired which can be renewable resources like wind power, wool etc. the resources can be
non-renewable like oil extraction. The acquiring of raw materials involves metals, coals,
farmed foods etc. it also involves the business that carried out for the mining activities and
revenue is earned by the selling to other business drives.
The Secondary business sector creates and distributes the finished goods by
conducting production and manufacturing business activities. The manufacturing industry
gets the raw material from the primary sector and combine them to produce a high value-
added finished product. The transferring of the raw material helps the business in earning
revenue by offering finished good to retailer and wholesalers. The labor productivity is
increased by the reduction in cost of production benefiting economies of scale. It adds the
value in the natural resources by creating valuable products (Suchenia, A and et.al., 2017).

Tertiary business sectors consist of those business which brings commercial services
to the dissimilar clients by involving transportation, insurances and other tangible worth to
the customers. This business produces income on the source of the facilities accessible by the
corporate in the marketplace. Examples: The business startup of Nail salon in the tertiary
sectors wherever it carries the commercial services by delivering various beauty services to
its customers over UK. The brand identity is developed by offering quality services and
revenue is generated by reaching out to large number of customers (Sungkono and et.al.,
2017).
Question 3
HR Policies and importance
The HR policies are the continuous guidelines on the approach adopted by the
organization to manage the workforce. It represents the specific guidelines to the HR manger
on the several subject matters concerning the organization intention of the Human resource
management like recruitment, promotion, compensation and training etc. in the context to the
Nail salon the HR policies are formulated by the HR manager to maintain the positive
business environment in the workplace and satisfying government measures (Sushchenko and
et.al., 2017).
Importance of HR policies
The HR policies helps in conducting the business in ethical way by conducting
different measures in demand to manage the business activities and to tackle the challenges.
It serves to the standard of performance where actual results are compared with policy in the
determination of how well organization members live up to professed intentions. The
importance of the HR policies leads to the employee motivation and loyalty by establishing
fair principles and justice so that growth can be enhanced. Another importance of the HR
policies leads to conflict resolution among the interpersonal and inter-group conflicts. The
policies help in clarifying the management thinking for decision making. The well-
established Human resource policies ensures the uniform and consistent treatment of all
employees in the organization by minimizing discrimination and favourism (Utama, C.A and
et.al., 2017).
Two HR policies are-

Health and safety policies: The health and safety include bringing job security to the
workers, workplace environment so that the personnel feel comfortable in the workplace.
These heath measures comprise the interpreting leaves of the workers such as paternity leave,
maternity leave, leaves for accidents and others. The human resource manager in context to
Nail salon business does not organize any such physical infrastructure that might damage the
employees, at a distance from the rendering job security to the employees. Emerging health
and safety policies benefits the commercial in directive to preserve optimistic employed
environment in the workplace which is vital in demand to upsurge the efficiency and
competence in the office. Health and safety policy are significant in command to carry
reasonable and translucent business function to offer security to the workers and function the
business operative in the utmost ethical manner with the lawful preceding of the government
of UK in instruction to indorse health and safety policies in the companies.
Equality and diversity policies: Evolving equality and diversity policies by the human
resource manager in Nail salon benefits to encourage fairness and correct administration of
the human capital in the organization. Whereas, an office entails of persons since different
backgrounds, cultures thus it turns out to be significant to esteem the social and cultural
beliefs of the persons. The human resource manager in Nail salon progresses policies in
directive to support the workplace multiplicity and that each and all workers feel relaxed.
Furthermore, the human resource manager in the association also apparatuses policies in
command to distributes equality in the office by interpretation equivalent opportunities to all
the employees at workplace. being it females or males in the office, by interpreting
opportunities, fair remuneration and compensation to the employees which is permitted after
any discrimination and biasness (Weske, M., 2019).
Conclusion
From the above study it has been concluded that clarity of prevailing resources is vital
in demand to own the business in the most moral and lawful method. Different legal
structures are framed by the government providing understanding and complies with all the
legal proceeding for the start-up of the business. The above study reflects the business
planning of startup by establishing innovative strategies and policies. The clear explanation
of several lawful assembly followed in UK and the precise legal structure of the corporate
startup, the sources of finance where the commercial accomplishes the deposit obligation and
moneys significant business strategies. The commercial segment where the corporate is

functioning inside the UK economy, the human resource policies and guidelines to
implement in the organization in directive to function the professional in the utmost
principled way. The reputation of the human resources strategies that in what way it
underwrites and accomplishes the inside labor force and business job management by
achieving the creative result from the optimal application of the existing resources.

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