Structure of Business: Legal Statuses, Sources of Finance, and Sectors in UK Economy

This document provides information on the legal statuses of businesses, including sole proprietorship, partnership, corporation, and limited liability company. It also discusses the strengths and weaknesses of these legal statuses. Additionally, it explores three sources of finance for starting a business, such as personal savings, financial institutions, and crowdfunding. Furthermore, it identifies three sectors within the UK economy where businesses can operate, including agriculture, manufacturing, and construction.

The structure of
business

Contents
INTRODUCTION...........................................................................................................................3
Question One:..................................................................................................................................3
Construct a table to show the various legal statuses of businesses and identify the relative
strengths and weaknesses of these legal statuses.........................................................................3
Identify and evaluate the strengths and weaknesses of THREE sources of finance....................6
Question Two:.................................................................................................................................8
Identify three sectors within the UK economy in which a business can operates.......................8
Question Three:.............................................................................................................................10
Identify at least two HR policies and comment on their importance to the modern workplace10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business is defined as an entity which is engaged in various industrial, commercial as well
as professional activities. Businesses are established for many purposes such as gaining profit or
for fulfilling the charitable missions and social cause. Basically, business is referred as the
organisation which is involved in producing various products and services in order to gain
profits. Structure of business make the organisation legal that influenced the day-to-day
operations of organisation. There are various tyle of business structure such as sole-
proprietorship, partnership, corporation and limited liability company that are chosen according
to organisation activities and operations. After the pandemic of covid-19, it becomes very
challenging for an individual to start business in the economy of UK. UK government has
supported to businesses and start-ups through starting various scheme of providing finance. The
following report covers the new business idea of opening a new restaurant in which variety of
food is being served. It is London based restaurant, that offer all cuisine food and concentrate on
biodegradable packaging that differentiates the organisation from others. In this report various
legal status of business, source of finance and HR policies are covered in this project report.
Question One:
Construct a table to show the various legal statuses of businesses and identify the relative
strengths and weaknesses of these legal statuses
In businesses are run under various legal structure that affect the business operations and
activities. Business owner analyse all legal structure of business then adopt the suitable structure
according to business functions and strategies that help to attain all defined goals and objectives
properly (Alotaibi and Liu, 2017). Some of legal statuses are mentioned below:
Types of legal
structure
Meaning Strengths Weakness
Sole-
proprietorship
Sole proprietorship or sole
tradership is defined as the entity
which as owned as well as run by
the single owner who is
responsible for business
operations. There are number of
It requires
minimum
investment or cost
to establish
business and there
are no need of
The sole-
proprietorship has
unlimited
liabilities, the
whole business is
managed by an

employees are included in this
legal status but there is no legal
relation between business and
owner. Owner of business get all
profits earned by business and
responsible for debts as well.
accounting and
business audit. It
contains easy
process start-up
as well as easy to
change
organisational
structure.
single individual
so, it becomes
difficult to take
breaks. It faces
difficulties to raise
fund for business
expansion and all
decisions are taken
by owner that may
be inappropriate.
Partnership Partnership is defined as the legal
or formal agreement between two
or more people who are equally
liable for business operations and
debts. All partners are come
together to run business and
agreed to share profits on the
basis of capital ratio (Franco,
2019). All partners are share risk,
benefits, responsibility and costs
of organisation on pre-determined
ratio which is mentioned in
partnership deed.
It contains less
formal and fewer
obligations to
establish
business.
It brings
knowledge,
experience, skills
and contacts at a
place and share
burden among all
partners.
The business
contains unlimited
liability,
Slower decision-
making process
and limited
business
development.
Private limited
company (LTD)
Private limited company is
managed and owned by the
shareholders and run by the
organisational directors. The
company has its own legal rights
and obligations and it has
separated existence from its
It is separated
legal entity that
contains limited
liability.
Easy transfer of
organisational
share and able to
In this business
structure shares are
not treated through
stock exchange.
Share are not
offered to public
and there are

members (Guo, 2018). There are
two forms of private limited
company such as company limited
by shares in which shares are not
offered to public and liability of
shareholder is limited to the
capital of their investment and
second is company limited by
guarantee in which members act
as a guarantor to contribute a
nominal amount at the time of
wind up.
raise fund from
venture capital.
restrictions to
transfer share.
Public limited
company (PLC)
Public limited company is defined
as the limited liability company in
which organisational share is
offered to for sale and trading to
general public. The organisation
must be allotted the shares of
amount at least 50,000 GBP
(Habersetzer, 2017). It is listed in
stock exchange through which
trading of shares are done. In this
organisational structure liability of
an individual is limited to value of
their investment.
Raise capital
through issuing
shares to public
and having
growth and
expansion
opportunity.
Shares are
transferred easily
and it has flexible
existing strategies
as well.
More legal rules
and regulations are
required to
establish and
perform operations
of business.
It requires higher
level of
transparency and
needs higher
finance to start.
Charitable
incorporated
organisation
(CIO)
The Charitable Incorporates
Organisation is defined as the new
form of legal entity which is used
for non-profit organisation. The
structure is designed for the
It is protected
from personal
liability and there
are various
financial benefits,
Limited sources of
funding and having
social pressure.
It is subject to
public scrutiny. All

purpose of reducing the
bureaucracy involved in the
operations of charity. It is quite
different from the charities that
are established as a limited
organisation as well as registered
in both company house and
charitable commission. CIOs is
registered in charitable
commission.
taxes are avoided
by the
government.
organisational
financial
statements are
available to general
public.
All business structure are evaluated by the entrepreneur and appropriate structure is being
adopted that help to conduct all business functions and run business efficiently. For the start-up
of new restaurant in UK that offers all cuisine food to their customers adopt the partnership in
which funds and other resources are brings by the partners and decisions are taken properly after
consulting with partners.
Identify and evaluate the strengths and weaknesses of THREE sources of finance
Finances for starting up business is defined as the funds which is needed by an entrepreneur for
the purpose of operating business functions or establish business. Finance is required in opening
restaurant that requires to purchase items such as furniture, buildings and machinery as well.
There are various source of finance to start business activities. finance plays essential role in
operating of business functions efficiently and to expand the business (Hillary, 2017). The
restaurant takes funds from internal as well as external sources that are mentioned below:
Personal savings: Personal saving is defined as the amount that is saved by the
individual and use in business operations that personal saving is bring by the owner, shareholder
or partners as well. As in the start-up process business need finance so an entrepreneur brings
their personal assets such as real estate, funds and stocks. The owner either sell these assets or
lend money on these assets in order to start new venture. These personal saving is used to
starting up business or perform daily operations. Strengths and weakness are mentioned below:

Strength: Personal savings facilitates the entrepreneur to run business operations
efficiently and reduce the need to take money from external sources on which interest is being
paid. It reduces the requirement of done lengthy paperwork that take too much time.
Weaknesses: There are various weaknesses of personal savings that limits is proficiency
it is not an effective option for acquiring large amount of funds to carry business operations at
large scale. As there are no legal agreement of acquiring fund through personal saving so, owner
demand for their funds on short notice that impacts on organisation cash flow.
Financial institutions: Acquiring finance from various financial institutes is the biggest
source that provides funds for entrepreneur to establish restaurant as well as expand business
operations. Organisation gets fund through ap plying loan from financial institutions to run
business properly. In order to get finance, entrepreneur should meet the eligibility criteria as well
as there are some legal documents are required that are issued by the bank (Jo, 2019). The
institutes provide long for long-term business projects such as starting up and expanding
business. Strengths and weakness are defined below:
Strength: Business can take loans from financial institutions for fulfilling the needs of long-
term investment at reasonable interest rates. The institution provides finance at lower interest rate
that reduce overall cost of organisation. The amount of fund is refund by the business on specific
period of time.
Weaknesses: The weakness of getting funds from financial institutes, organisation need
collateral securities as well as the amount of loan is repaid after fixed period of time which is
mentioned in agreement. As the business paid the fixed interest rate that impacts on overall
generating ratio of restaurant.
Crowdfunding: Crowdfunding is most effective and popular way to getting finance for
business establishment and expansion in competitive market. It supports new business ideas that
become history, then crowdfunding is the most effective option to get required amount of
finance. To get finance, business need to share their new business idea on the website in order to
enhance the amount of funding (Lehnert, Linhart and Roeglinger, 2017). Business get fund
through crowdfunding for the long-term purpose such as start-up and expanding business not for
the daily operations and expenses.
Strength: The biggest strength of crowdfunding is that the entrepreneur gets access fund
even they have low credit score. Business gets fund on time as well as there are no requirement

of any qualification to start crowd funding campaigns. Business only conducts marketing for
building the interest in the business idea and maintain brand image.
Weaknesses: The weakness of crowdfunding is scrutiny as well as rejection if the owner
doesn't fulfil all criteria and requirements of crowdfunding. In the current competitive
environment, various business are looking to gain funds for their new business ideas from
crowdfunding that reduce the chance of getting finance.
Question Two:
Identify three sectors within the UK economy in which a business can operates
There are various sectors that are becoming more popular and these sectors are growing ay
very fast rate at UK economy. These three sectors are agriculture, manufacturing and
construction. Business in UK can operate in these sectors and ensure their growth and
development. The sectors are defined below:
Agricultural sector: Agriculture industry is defined as the most effective and oldest business
sector that includes various activities and functions such as cultivating the land, producing food
for survival and breeding animals as well. Agriculture plays important role in the growth and
development of any country’s economy. In the economy of UK it is most fascinating business
sector which is continuously growing and contains variety of opportunities. In current business
environment various modernization is implemented in agriculture industry that are coming late
20th century which is termed as “Green revolution”. Agriculture maintains the ecosystem of UK
and other countries higher share in the gross domestic production of economy and the rate of
growth od respective business sector is developing at vert fast rate. There are various activities
are included in agriculture economy like selling the products, producing better quality agriculture
products and export then to other country (Mansoori and Lackeus, 2019). Apart from that the
sector provides employment to biotechnicians, farm labour and development technicians. Now
days farmers are using different type of pesticides, fertilizer as well as modified plants for the
purpose of increasing total production. There are various companies in the UK which are
involved in agriculture activities at large scale such as Cargill and Minneapolis.
Manufacturing sector: Manufacturing sector is another business sector in which
organisations operate. It is defined as the process of converting raw material such as human
resources, efforts and other materials in final products for the purpose of selling in UK market

making fit for consumption of public. There are various business that comes under
manufacturing industry in which business operates there functions and gain profitability, these
sectors are food industry, transportation equipment industry, wood industry, petroleum industry,
leather industry and electrical industry which specific products are produced in factories and
mills and these products are getting prepared either by hand or by the machinery for sell in the
market. The respective industry provides employment at very large scale to specialist as well as
labour in UK that help to develop economy rapidly. As in UK. about 12 billion people are
getting employment in the manufacturing industry (Nason, Mazzelli and Carney, 2019). The
industry is being different form agriculture and other business sectors in its production and way
of operating business. The industry emphasis on producing higher quality products for selling
them in the market of UK in order to satisfy customers properly that ensures the success and
development efficiently. High investment is needed to establish and running all operations on
business properly.
Construction industry: Construction sector is defined as the largest business sector that
includes number of activities such as designing construction sites, build them as well as
maintaining the infrastructure in which business can operate. The construction industry is being
divided in various sectors such as general constructions, heavy as well as specialised
construction the includes functions according to their size and nature. In Heavy construction
various activities are included such as construction of bridges and roads. In the general
construction, constructing of residential places as well as real States are included. In the last type
of construction like specialised construction consist different functions from other construction
like building the things of wood and electrics (Triantis, 2018). In current business environment
various technologies are used in designing and constructing modern buildings and houses. Latest
technologies bring various advantages in construction sector that help to perform all functions
with efficiency facilitate to attain the objective of growth and development. There are Building
information modelling technologies which is used in construction industry for completing
construction work on time. As in construction site number of employees are included who
perform various functions efficiently but it becomes difficult to manage and communicate the
ideas among all employees. BIM process is being used in the construction site that reduce
various problems and creates a common platform that help to communicate all ideas and
concepts among all members. There are high amount of investment is being needed for purchase

and installing new technologies. Construction sector is important for the growth and
development of UK economy through contributing high share in GDP. The respective industry is
quite different from agriculture as well as manufacturing industries in terms of its function,
procedure and other activities as well.
Question Three:
Identify at least two HR policies and comment on their importance to the modern workplace
In current modern workplaces different HR policies are implemented that plays important
role in performing all business functions and activities efficiently. There are various modern and
latest trend are being updated in the policies as well as business manuals in order to resolve all
conflicts and misunderstanding from workplace as well as protect business form external
impacts. Execution of effective and strong HR policy facilitate the business through maintaining
the internal as well as external business environment in order to meet the defined ethics,
requirement of diversity and employee training that are essential for maintain workforce at work
place (Sardo and Serrasqueiro, 2017). There are different set of applications, code of conduct and
disciplinary procedure is implemented at work place for smoother working. Some HR policies
are mentioned below:
Health and safety policy: It is mostly used human resource policy at workplace within
every organisation. In this policy different emergency procedure, workplace conditions as well as
employee contact information is being included that facilitates the business to maintain safe and
healthy working environment. At the time of covid-19 pandemic, organisation implement safety
protocol that protects employees from any hazards and enhance their performance and
productivity. There are certain minimum standards are executed by the business in order to
protect wellbeing of organisational employees (Nishiyama, 2019). Conflicts as well as violence
of workplace linked with employees’ health and security.
Equality and Diversity policy: In an organisation number of employees are worked who
come from different backgrounds and cultures, organisation need to treat them equally without
discriminating them on the base of employee gender, nationality, age and culture. Diversity and
equity policy facilitate the business to protect employees and treat them equally. In current
business environment job seekers want to know prospectus of organisation regarding policies of
equity, diversity as well as inclusion. As per the PWC, about 85% of global businesses states that

diversity and inclusion is the priority policies of business that help to enhance employee
performance and retain them with organisation for long-run. Through applying the policies,
organisation assure that protection of employees against racism and different movements.
Business must adopt and develop comprehensive policy as well as program for the purpose
organisation different from other competitors through hiring suitable employees (Rückeshäuser,
2017). The respective policy facilitates the organisation to achieve defined goals through
supporting leadership. It is being determined that equality policy available on help to enhance
employee morale through conducting various activities such as equal values and beliefs in equal
rights, equal education, equal pay and equal opportunity to all organisational employees.
CONCLUSION
From the above, it can be concluded that business structure is important for running business
in well-defined manner as there are different types of business legal statuses which are used by
the organisation to make their business and its functions legal. Every business structure contains
their own strengths and weakness so, business must evaluate all factors and adopt the suitable
one that support business activities and help to attain defined goals and objectives. For the
purpose of establishing business, there are various source of finance that provides funds to
business to complete all legal formalities and perform business functions as well. There are
various business sectors are working in the economy of UK that facilitates the economy through
ensuring growth and development. The sectors provide employment and quality products to
customers that help them to attain defined objectives efficiently.

REFERENCES
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