Key Sources of Laws for Business Organisations in the UK

This report by Desklib discusses the legal context for business organisations in the UK, with a focus on IOM Solutions, a business selling electrical parts. It covers different business types and their legal consequences, including sole trader, partnership, limited liability, and cooperation. The report also provides recommendations for IOM Solutions, suggesting partnership as the most effective form of business organisation for its expansion.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
Submitted by:
Name:
ID:
Contents
1

Table of Contents
Introduction ...............................................................................................................................3
Businesses & Organisations in the UK........................................................................................3
The legal business structure of UK companies..........................................................................5
Sole Trader.............................................................................................................................6
General Partnership...............................................................................................................7
Partnership............................................................................................................................7
Limited Liability......................................................................................................................7
Recommendations for IOM Solutions........................................................................................7
Conclusion..................................................................................................................................8
REFERENCES...............................................................................................................................9
2

Introduction
Body of law that is governed by business or an organisation and commerce is
known as business law. It can also be considered as civil law branch that has its
dealing in private and public laws and issues also. It contains the process of hiring of
business policies and practices, contracts of corporate sector, marketing of
consumer goods that is selling and production. There are many kinds of commercial
laws that are adopted by business organisation (Bellace, and Ter Haar, 2019). Study
of IOM Solutions that sells electrical parts is discussed within this report and it sells
these to different local garages. The owner of this business is Sam and is running
business from last eight years. Sam is operating under pressure from last two years
because of the growth of business in market. There are various different business
types explained in this report for IOM solutions along with their legal consequences
and there are recommendations for it for identification of suitable business form is
also discussed within this report.
Businesses & Organisations in the UK
IOM solutions is growing from last two years in market and is facing problems
because of the pressure the owner, that is Sam who is a sole owner and trader of
the organisation. There are many different options that are available in market to
meet demand of growing business in market. Company can go for adoption of that
business type that allows it in the management of business along with its expansion.
It is essential to focus on the selection of most appropriate and best business type in
this tough competition between companies (Boyd, Brian and Kane, 2018). For the
increase in efficiency and effectiveness and operating of business, there should be
selection of best type of business approach for growth. there should be focus on the
development of key approach and policies in best business type by all companies in
the national and the global market. It will help Sam in reduction of working pressure
and allow there will be involvement of many talented people in business for meeting
the demands of market. Some of the various options that are available to IOM
solution are explained as follows:
Sole trader:
This business form is the one which is operated and runned by a single
member that is the owner. In this, business decisions are taken and are depended
3

on the owner and if the owner is not present then there will be no decision making.
There is no legal identification of that organisation, legal entity is only of the owner.
There is low initial costs and capital because of small business. In this, income is
taxed on the basis of legal entity of the owner as a personal income source. IOM
solutions is one of this type and Sam is the owner. The profit sharing is only with
Sam and there are less regulations that are followed in its working. There is proper
flexibility in business running to owner.
Partnership:
This is business organisation that is based on formal agreement and deal in
between two or more people who decide to operate a business collectively
(Clevenger, and MacGregor, 2019). It can be run by individuals or two different
organisations. There is presence of clear stated authority, liabilities and sharing of
profits in business in between the partners. All partners have different and clear
stated responsibilities, duties and benefits. There is always an impact over
operations in business with the choice of partners in company. There are two kinds
of partnership and these are general partnership and limited partnership. Partnership
that involves all partners to be liable for all losses and profits of company, and also
all its debt and also obligations in market. On the other hand, when a partner or
partners that are limited to be investor in company and possess no liability is limited
partnership. There are two types of partners in limited partnership and that are
general partner and limited partners. IOM solutions that is Sam can adopt this form
as it will allow them with the benefits of more capital along with profits and shared
responsibilities and duties. This will also reduce Sam’s work in business.
Limited liability:
When there is limited liability and also have income and profits advantages in
business is called limited liability. It provides benefits to owner as it constitutes of
limited liability in losses and debts and even there is sharing of profits in business to
owner without double taxation (Davidson and Forsythe, 2020). There is separation of
owner from the liability and it is just taxed as different corporation or partnership.
IOM solution can go for adoption of this business form as it will allow them to have a
separate identification from business. There will also be effective management of
business and also the advantage of limited liability. It will also allow business to have
more partners in its business who will have sharing of responsibility of work that will
4

reduce burden of work as well as will also provide opportunities in business for
expansion in market. There will also be more funds and resource availability to the
business.
Cooperation:
When there is separate entity of business and owner for generation of profits
in business is called a corporate or business cooperation. There is separate liabilities
of person and business in this business form (Graw, et. al. 2019). In this, corporation
and owner both possess different rights and responsibilities that can be enjoyed by
owner in form of owning assets, in payment of taxes and also in hiring of employees.
It can also be adopted by Sam for IOM solution as it will help in limiting his liability.
In this profit belongs to business and also loss belongs to business different from the
owner. In this, transferring business is easy and simple to new owner and even the
owner’s personal assets are not liable in payment of business debts.
The legal business structure of UK companies
The legal structure of the business as well as the outcomes of various kinds of
organisations consist of the laws and its associated different dimensions. This is one
of the key role of the administration of the company for ascertaining all the principle
legal consequences thjat are concerned with developing a business entity. Within the
UK, there are two main types of the businesses and these include incorporated
businesses and unincorporated businesses. When a business gets incorporated
then a separate as well as distinct legal entity is developed. Such kind of businesses
act independently of the owners of business and incorporating an organisation gives
the business with so many legal rights that are granted to a person with the
exception of voting privileges. The unincorporated organisations are such
businesses that have less interference of the governmental bodies. Such kind of
business organisations consist of the major business that are created without any
legal formality (Herawati, 2018). The key responsibility of the unincorporated
business is to follow various rules as well as regulations that are framed by the
government of the nation such as United Kingdom. This will help in leading the
marketplace in an effective as well as efficient manner. Under unincorporated
business, there are different organisations and these businesses include sole
proprietorship as well as partnership. This is the main function of a business to take
5

into account the effective approaches of the process of developing significant
method that is beneficial in the process of forming a legal structure. Unincorporated
business structure consist of very easy and simple formation and it also has less
legal formalities. Both private as well as public organisations get covered under such
kind of business. Private companies are those that include Private Limited at the end
of the name of the organisation. The shares of such companies are not given to the
general public. These types of organisations also involve minimum or less
interference of the political system of the country for building effective edge within
the business (Mba, 2019). These companies have been managed by different
directors themselves and along with it, debentures are considered as key sources for
arranging funds. Public organisations are those that put Public Limited at the end of
its name. The shares of these businesses are sold to the general public and in UK,
there are many different public limited companies that are run by the government.
The formation of such companies require two directors or more including company
secretariat. There is a requirement of different documents in formation of such
company and these documents include Memorandum of Association, Article of
Association and digital signature of owner. Business management in these
companies is complex and also comprise of more functions in comparison to public
organisations. Funds for such organisation are collected from different institutions of
government, public taxes, consolidated funds and many others. These companies
contribute to the gross domestic product, national income as well as employment
within a country.
Sole Trader
It is a type of business that gets commenced as well as managed by an
individual and within this kind of business, there is less involvement of the
government and other legal formalities which are associated to business. All ethical
as well as legal responsibility of performing business functions is in hand of a single
individual (Morabito, 2018). The sole trader within such type of business use INHRC
number for getting the business registered. In this kind of the business, funds are
arranged by members of family and friends. The key concentration of sole trader is
on different parameters of the legal structure as well as approach that is used by a
company. Sole trader business helps in improving the condition of economy of the
country by making it strong.
6

General Partnership
Such type of organisation is formed by two persons having a motive of earning
as well as maximising profits and revenues within the business. It is a key element
that forms the business to get covered with costs, risks, benefits as well as
responsibility in order to run the business in a smooth way. As per this kind of
business organisation, profits generated within the workplace are divided among the
partners of business (Tabalujan, et. al. 2018). Its registration is associated with
creation of INHRC number and agreement is formed on basis of partnership
agreement that is related to partners only. Funds are arranged through investment of
the partners and it also has less formalities and all burden is shared by partners
themselves.
Partnership
In such types of organisations, business is formed with the support of two or
more individuals. The key objective of such kind of business is to earn and maximise
the level of profits within the workplace. This type of organisation is considered as
one of the most effective aspect of the formation of business organization.
Limited Liability
Within such type of business, there are two or more partners that are engaged
in carrying out business operations and invest the amount as per their interest in
business (Wilson, 2019). All work gets handled according to investment which is
done by partners themselves that results in profit generation which helps in
conducting business functions effectively.
Recommendations for IOM Solutions
From above explanation of case scenario, the most effective form of business
organisation that is recommended to IOM Solutions for the purpose of its expansion
is partnership. It will help the respective organisation in performing the business
operations in an effective as well as efficient manner. This kind of business
organisation also ensures that there is less investment within the formation of such
business which creates it cost-effective organisation in nature.
7

Conclusion
From above explanation of report, it has been concluded that business laws
are used for the purpose of making business organisations developed in a more
effective way. With the help of laws, operations of business are conducted smoothly
and also the laws facilitate in forming the strong legal structure. Within the report,
different things have been covered which are concerned with the types of business
organisations and their legal structures. Moreover, the legal recommendations
regarding expansion of business have also been given to IOM Solutions that will help
company in gaining competitive edge within marketplace.
8

REFERENCES
Books and Journals
Bellace, J. R. and Ter Haar, B. eds., 2019. Research handbook on labour, business
and human rights law. Edward Elgar Publishing.
Boyd, G. S., Brian, P. and Kane, S. F., 2018. Video game law: Everything you need
to know about legal and business issues in the game industry. AK
Peters/CRC Press.
Clevenger, M. R. and MacGregor, C. J., 2019. Business and Corporation
Engagement with Higher Education: Models, Theories and Best Practices.
Emerald Group Publishing.
Davidson, D. V. and Forsythe, L. M., 2020. Business law: Principles and cases in the
legal environment. Wolters Kluwer Law & Business.
Graw and et.al., 2019. Understanding business law. LexisNexis Butterworths.
Herawati, E., 2018. Binus business-law. Retrieved April.
Mba, S. U., 2019. New financing for distressed businesses in the context of business
restructuring law. Cham, Switzerland: Springer.
Morabito, V., 2018. Lessons from Australia on class action reform in New
Zealand. New Zealand Business Law Quarterly, 24(3), pp.178-211.
Tabalujan and et.al., 2018. Singapore business law.
Wilson, M., 2019. Art law and the business of art. Edward Elgar Publishing.
9