The Structure of Business

THE STRUCTURE OF
BUSINESS

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................1
a) Table showing various legal statuses of businesses with their strengths and weaknesses......1
b) Weaknesses and strengths of THREE major sources of finance that are available to a start-
up business...................................................................................................................................3
QUESTION 2..................................................................................................................................5
Identification of three main sectors within the economy of UK in which an organization can
operate. Also differentiate between these sectors and their value to economy of UK................5
QUESTION 3..................................................................................................................................6
Identification of human resource policies and explain their importance within a modern
workplace.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

QUESTION 1
a) Table showing various legal statuses of businesses with their strengths and weaknesses
Legal status is a status of business defined by law (Sheremetieva, 2020). This legal status
of business help organizations in understanding ways in which organization should run, decision
making within organization should be like etc. Some of the main types of legal status of
businesses that can be adopted by a start-up business have been explained below with their
strengths and weaknesses in below table:
Legal Status Define Strengths Weaknesses
Sole Trader Business which is
run by a single
person and their skill
set is known as sole
trader
Major strength of sole trader
is that, it requires minimum
cost. Another strength of sole
trader is that all profits of
business belong to sole owner
of the business (Hamid and
Razavi, 2017). One of the
main strengths of this legal
status of business is that there
is no requirement of business
audits.
One of the main weakness of
sole trader is that all the
liabilities for debts are incurred
by sole owner of the business.
As the business grows it might
become difficult for sole owner
to access finance.
If business is completely
dependent upon owner then it
can limit capacity of growth of
business.
Partnership When two or more
than two people are
involved in a
business and when
all the risk, cost,
profits etc. are
shared between all
the involved people
then it is known as
partnership
Even if a partner lives the
organization, business can
survive, all the management
responsibilities are shared by
all the partners. Another
strength of this legal status is
that availability of capital
investment increases.
different skill sets of partners
strengthen this business
because it increases chances
of survival of business.
Disagreement between partners
might increase risk of survival of
business.
All the partners are held
responsible if any kind of
negligence occurs.
All the partners have unlimited
liability of debts incurred.
1

Limited Company Business which is
started as a separate
entity from its
owners is known as
limited company or
an organization
whose finances are
different from
personal finances of
its owners.
One of the main strengths of
this legal status is that
business has unlimited
lifespan and owners of the
company have limited
liability for debt (Abuseridze,
2017).
Capital for the business can
be raised by issuing shares.
Another one of the main
strengths of this legal status
business is that board of
directors and management
team control business but
they themselves are not liable
for debt liability.
One of the main limitations of
this legal status business is that
cost of setting up business and
administration of business are
much higher.
Another one of the main
limitations of this business is
that all kinds of auditing and
accounting procedures are
applied and it is important for
business to go through strings of
auditing and accounting
business.
Limited Liability
partnership
Business
organizations that
are a combination of
partnership and
limited company are
known as limited
liability partnership.
One of the main strengths of
this legal status business is
that each of the partner of the
business have limited liability
to money that partners had
put into their venture and
amount of person guarantee
they had given to business or
raising any finance for the
business (Shrotriya, 2019).
Some of the main limitations of
limited liability partnership are:
at least two partners are required
to be designated as members and
are required to have additional
responsibilities.
LLP business organizations are
required to register at company’s
house and file for annual returns.
All the members of such
business organizations, if they
make profit then all those profit
are taxable.
Community Interest
Company
Such type of
business
One of the main strength of
this type of business
On of the main limitation of this
type of busiess is that owners of
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