The Structure of Business

This document discusses the structure of business, including legal statuses, sectors of operation, and the importance of HR policies in the modern workplace. It covers topics such as PLC, LTD, registered charity, primary, secondary, and tertiary sectors, and health and safety policies and benefits and compensation policies. The content provides insights into raising capital, different business sectors, and the significance of HR policies.

The Structure of Business
1

TABLE OF CONTENT
Introduction......................................................................................................................................3
Chapter 1......................................................................................................................................3
Chapter 2......................................................................................................................................3
REFERENCE..................................................................................................................................5
2

Introduction
Business structure refers to the way how business looks like and it is different in every
business as it is based on size, nature, revenue etc. this report will discuss that how start up
business can raise capital to start their business functions. Various legal structures will be
discussed with its advantages and disadvantages. Further will identify sectors in which business
can operate and the difference between each sector. This report will also discuss HR policies
and why they are important to modern organisation.
Main body
Question 1
legal statuses of businesses
PLC LTD Registered charity
Public limited company
(PLC) is considered as the
public company which is
undertaken through
corporation designation.
When it is publicly traded
corporation then it is
mandatory to use PLC after
the name of company so that
stakeholders can come to
know that it is the public
company (Viswanadham,
2018). The PLC company
lists their shares at stock
exchange so that public can
purchase it.
Ltd company is said to as
private company under which
liabilities of owners are
limited to the amount which
they had invested in the
business. So it can be said
that owners have complete
responsibility of the debts. So
company is the separate
entity. In ltd company
personal assets of the owners
are protected. Limited
company is flexible in nature
in terms of hiring employees,
appointing shareholders etc.
Charity organisation means
the organisation who is
working for the community.
There main objective is not to
make profit but to serve the
society. The income which is
made by the charity
organisation they spend on
the community welfare. The
employees which are working
in charity companies are
trained in such a manner that
they can serve to the society
in the better way.
Strengths of PLC:
3

It is helpful in raising capital via issuing shares to the public. It is the most important advantage
that PLC companies can raise funds directly from the public by just listing their company on
stock exchange. It allows public to purchase the shares of the company by investing money into
the company. Through this process company can raise large amount of capital. As it widens the
base of shareholder and this is helpful in spreading the risks amongst many shareholders. It is
obvious that when shares are offered to the public then it will be purchased by many people
which will become the shareholders of the company so risk of the company will be distributed
within the shareholders.
Weakness of PLC:
It requires high level of transparency. PLC company have major detail on public domain and
shareholders demand transparency so that they can come to know that what is happening in the
company. They also have to audit their accounts. In the public domain one can find out complete
information regarding their performance. This information can be used by their rival company.
There is the possibility of arising ownership and various control issues. There are many owners
in the company as shareholders so they can transfer their ownership when they want to.
Strengths of LTD:
It is known by every one that limited company is called as tax efficient when compared with sole
trader. So that is why ltd company is the famous business model. Under the ltd company director
acquire majority of amount on which they do not have to pay the tax in the tax year. Limited
company have limited liabilities to the owner of the business. When compared to sole trader he is
completely liable for his business (Muntean, Bogusevschi and Muntean, 2019). That is why
majority of people is attracted towards this model. When business will have limited liability then
at the time of debt, private property of owners remains safe and court cannot order owner to use
his personal assets to pay the debt amount.
Weakness of LTD:
Limited company cannot be easily get set when compared with sole trader. As sole trader only
has to go for registration while ltd company have to get registered them with the companies
house. For setting the ltd company, owner also have to pay fees for that. When compared to other
nosiness structure it is found that the accounts of limited companies are complex. As on every
month director have to record the data.
Strengths of registered charity:
4

Charity company normally does not pay income tax, stamp duty, corporation tax etc. charity
business also pay low rate of money when they use building or the property for charitable
purposes. As government or local authority provides relief to the charity company in terms of
payments. In some of the situations charitable organisation also receive special VAT treatment.
But charity is not completely exempted from VAT but are treated special. The donations which
they receive from private parties, these organisation can reclaim gift aid. They are also able to
raise funds from the public and from the government as well.
Weakness of registered charity:
As charity organisation are formed for charity purpose so they cannot carry such business
activities through which they can easily make big money if society is on stake. Government
monitor such organisation strictly when they trade by charities. Under this type of company
trustee cannot enjoy financial benefits but in other business structure trustee can receive financial
benefits.
Three sources of finance available to start up business
Venture capital:
capitalists are known as investors which invests in the business who have innovation
ideas. Mostly they fund technology-based ideas. Venture capitalists funds at the initial stage of
the business and leave the business when the company has reached at the stage where they can
easily survive in the market. VC invests in the company in return of equity of the company.
Company gives some equity shares to venture capitalists. But this investor gets the money only if
the business is taken over by other company or has listed in public.
Strengths:
Venture capitalists invests large amount of money in one go and along with that they also
provide expertise and knowledge to the company. They also provide special assistance so that
business can expand and grow easily (Castillo-Rosa and et.al., 2017). When business is funded
by venture capitalists then it increases reputation and credibility of the business. They open doors
for other investors and partners to invest in the business.
Weakness:
Venture capitalists invests money in the business for their personal gain. They make investment
in order to make money from the business. VC thinks about money all the time and they can see
5

and interfere in the business operations if they will not get return on investments. There is
possibility that VC can try to divert the business in the direction which the owner does not agree.
Bank financing:
Bank loans are the most used sources of finance for the business. It is also easy to get and bank
grants various loans to the business like short term loan, long term loan, special loan etc. bank
gives loan to the business and take some assets as the guarantee. If business does not pay the
money then bank can sell the assets and can recover the loan amount (Advantages and
Disadvantages of Different Sources of Finance., 2020).
Strengths:
Banks are the most flexible source of funding because it offers variety of funding amounts and
have easy pay back options which can fulfil business needs. If business qualify on the terms and
conditions of banks then the funding is quite rapid. If business will choose this option then there
is no need to give equity shares to the public.
Weakness
It is not easy for every business to take loan for the bank because banks also have complex
criteria which keeps on changing with the time. When taking loan from financial institutions then
business have to go through complex documentation procedure which is time consuming.
Financing options are not easy to understand so it requires expertise and knowledge in this field.
Bank overdraft:
It refers to the credit facility which is for short term that is given by the banks to only its current
account holders. Under this facility business can withdraw more amount from their bank account
which the account actually has. If business has withdrawn more amount, then their account
balance then they have to pay interest on the amount which is more withdrawn.
Strength:
Business does not have to keep any security for taking overdraft facility. When business faces
short term cash deficit then this option is ideal. It can be easily arranged and is also fast. As OD
is the short term debt so it cannot be calculated in the firm’s gearing ratio.
Weakness:
Under bank overdraft business cannot withdraw as they want because it comes with the
withdrawal limit (Manaye, 2018). Interest which has to paid on getting this facility is on daily
basis. Overdraft cannot satisfy long term finance needs of the business.
6

Question 2
Sectors under which the business can operate.
There are three types of sectors which is primary, secondary and tertiary.
Primary:
Under this sector industries are generally focus on extracting raw materials from the nature or
natural land. Those companies falls under primary sector which grow goods in the lands or
extracts raw material. Examples are mining, fishing, farming etc.
Secondary:
This sector deals with the manufacturing part. This sector purchases raw materials from the
primary sector and then convert them into finished products which is the new product and ready
to use. Examples are building companies, car manufacturing companies etc.
Tertiary:
This sector provides services to the people. Services refers to those activities which are provided
by the employees of the company to their customers (Difference between primary, secondary and
tertiary sector., 2020). Examples banks, cinemas etc.
Sole trader:
Sole trader is the person who runs business at their own. As they are the owner of the business.
Decision making remains in the hands of owner only.
Partnership:
Partnership means when two or more person group together and run the business. Risk and
capital are distributed amongst partners.
Difference between three sectors:
Primary sector Secondary sector Tertiary sector
This sector is called as the
allied or the agricultural
sector.
This sector is called as the
manufacturing sector.
This is the service sector.
The purpose of this sector is
providing raw materials for
making finished goods and
services.
This sector converts one good
into another so that they can
give more utility.
This sector gives services to
both the sector which is
primary and secondary.
This is the unorganised sector This is the organised sector This is the most organised
7

and still using traditional
technique to do the work.
and have better and modern
technique.
sector and utilizes modern
logistics tools in order to
perform the functions (Lipi
and Lipi, 2017).
Activities which is carried in
this sector are mining,
forestry, agriculture, fishing,
animal husbandry etc.
Activities which are
undertaken in this sector are
manufacturing units,
multinational companies,
small scale companies etc.
Activities taken in this sector
are banking, insurance, hair
salon etc.
This sector can be mostly
found in the developing
countries where large number
of population is engaged in
this sector. When compared
with developed countries
there large population sector
does not rely on this sector
for their bread and butter.
If an individual wants to work
in this sector then they
require special knowledge
and skills because converting
raw material into utilized
good is not easy.
This sector is contributing
large in the economic
development. This sector is
also providing employment to
many people and the sector is
improvising so that can
provide employment
opportunities to more people.
In UK economy these sectors play vital role. Tertiary and secondary sector is helping the
country in increasing its economy. Finance, entertainment, retail etc are the industries which falls
under tertiary sector is contributing very much in the economic development of the country.
Secondary sector is also giving income to the country. As there are several companies in UK
which are into car manufacturing or manufacturing of other things. Primary sector is contributing
less in the economic growth as compare to tertiary sector (Wilson, Kacer and Wright, 2019).
3. HR policies and their importance in modern workplace
Human resource seems to be important for the workplace. While through which the
organization can easily make sure for having the better estimation at their business. The
workplace constantly evolving and modernizing the important things about the HR policies. The
list for having the better polices such as number of factors, size, location and unique
8

requirements of organization. However, here some two HR polices that can make their
importance at modern workplace:
Health and safety policies:-
Industry should keep their employee belongs to workplace injuries due to having the
work. The health and safety policy must be important for outlining the procedures and
responsibilities for all employee in keeping the workplace more safer for everyone. While this
could be also important for knowing about the safety about the employee (workplace safety:
importance, benefits, and ways to incorporate it, 2021). This could be first steps in the
organization for keeping the safety about the employee. Employers should investigate all
accidents at workplace and also encourage employee for having the following the safety rules.
Research have been shows that new employees have high risk at their workplace. This could be
also important for knowing about the rules and many other safety process for their employee and
make sure for having the high impact over through which the employee can avoid risk
management. Employee legally obligated to ensure about the safe environment. While this must
be end workplace safety hazards and also promote the safety at their workplace (Chapman,
2020). Organization will get more benefits while by keeping their employee with promoting
breaking after completing the important projects.
Benefits and compensation policy:-
Employees in organization should know when and how they will get benefits from the
leave and make sure for having the high terms for which they can manage their work. The policy
should be also outlined the payroll and payment methods for employee, list of having benefits,
wellness program, allowances, bonuses and so on (15 Essential HR Policies, 2020). This could
being also important in knowing about the various factor which can help for having job
satisfaction. This could be also designed compensation and keep their benefits plan for which the
work can be done. At workplace employee will happy and make their more efficiency while in
working for their organization. Motivation can be important for some of money for having the
work and for which organization give them high pay. While for keeping some of the
achievement more than money, that could be important for keeping the motivation and have
greater chances for development, promotion and also learn many things. Low turnover can be
also important for knowing about their things for which the employee can easily use the less
resources for their target. While in keeping the mind for the turnover the organization can easily
9

make sure for having the better growth and development (Imran and Atiya, 2020). Increases the
self-confidence for having the rights compensation and make their organization promotional
activities for which they can easily make their tasks.
Conclusion
Through this report it can be concluded that business can choose the legal status as per their
need and size of the business. Report has discussed various statuses which are ltd, PLC and
charity. It has also evaluated sources of finance available for the business. Sources of finance
which are short term finance and long term finance are available for the business so that they can
expand and grow. Report has analysed venture capital, bank loans etc as the sources of finance
which can be used by start up companies. Report has analysed sectors and importance of HR
policies in modern workplace. Health and safety are vital and is the right of every employee.
Compensation when provided to employees will motivate them and that will increase their
productivity.
10

REFERENCE
Book and Journal
Castillo-Rosa, J. and et.al., 2017. Personal factors and consequences of electrical occupational
accidents in the primary, secondary and tertiary sectors. Safety science. 91. pp.286-297.
Chapman, M., 2020. Courageous leadership–what defines it in the modern
organisation. Strategic HR Review.
Imran, R. and Atiya, T.M.S., 2020. The role of high-performance work system and human
capital in enhancing job performance. World Journal of Entrepreneurship, Management
and Sustainable Development.
Lipi, I. and Lipi, R., 2017. Small Business Tax Evasion, is There a Case of Internal
Finance?. Acta Universitatis Danubius. Œconomica. 13(2).
Manaye, M.K., 2018. Challenges for Small and Micro Enterprises in Accessing Finance (Case of
Wolaita Soddo Town). Global Journal of Management And Business Research.
Muntean, C.H., Bogusevschi, D. and Muntean, G.M., 2019. Innovative technology-based
solutions for primary, secondary and tertiary STEM education. Paragon Publishing.
Viswanadham, N., 2018. Performance analysis and design of competitive business
models. International Journal of Production Research. 56(1-2). pp.983-999.
Wilson, N., Kacer, M. and Wright, M., 2019. Equity finance and the UK regions: Understanding
regional variations in the supply and demand of equity and growth finance for
business (No. 2019/12). BEIS Research Paper.
Online
15 Essential HR Policies, 2020. [Online]. Available through: <https://sprigghr.com/blog/hr-
professionals/15-essential-hr-policies/>
Advantages and Disadvantages of Different Sources of Finance., 2020. [Online]. Available
through: <https://www.mbaknol.com/business-finance/advantages-and-disadvantages-of-
different-sources-of-finance/ >
Difference between primary, secondary and tertiary sector., 2020. [Online]. Available through:
<https://byjus.com/free-ias-prep/difference-between-primary-secondary-and-tertiary-
sector/>
Workplace Safety: Importance, Benefits, And Ways To Incorporate It, 2021. [Online]. Available
through: <https://blog.vantagecircle.com/workplace-safety/>
11