Nature and Legal Structure of UK Companies: Assessment Report

This assessment report discusses the nature and management of UK companies, legal business structures, and provides a recommendation for IOM Solutions company. It covers sole trader, general partnership, partnership, and limited liability. The report recommends partnership as the best organization type for IOM Solutions to expand its business.

Assessment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Businesses and organisations in UK-...........................................................................................3
The legal business structure of UK companies............................................................................5
Recommendation for IOM Solutions company-..........................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Assessment can be defined as the systematic basis which helps in effective learning as
well as helps in developing the students and individual. It is basically the process which involves
defining, selecting, designing, collecting, interpreting as well as analysing the information which
helps in increasing the learning and development of the students. This assessment will discuss
the nature and management of the company as well as the overall legal structure of the
companies in UK. Along with this, the recommendation will be discussed for the IOM solutions
for using the organisation type which will help them in expanding the business.
MAIN BODY
Businesses and organisations in UK-
Nature and management of Organisation:
IOM solutions is sole trader company which means it is the self employed person who is
considered as the owner of business. There are no partners and the shareholders involved for
making and consulting before making decisions. This enable the proprietor to enjoy the
maximum freedom for running the company.
Different types of laws:
 The legal requirements of the self assessments are such as-
 Registering for self assessment
 Choosing the name according to rules and laws
 Keeping the recordings for sales and expenses of business
 Sending the tax return every year
 Paying the tax bill Complying with HMRC's rules of VAT (Seddon and et.al., 2021)
Business transactions management of company:
The business transactions of the IOM solutions is managed by single owner who runs the
overall business. The owner is solely responsible for managing the business transactions of the
company by keeping the record of the overall sales and expenses which are occurring within the

business. As the IOM solutions company is selling the electrical parts keeping the records of the
transactions is responsibility of the single owner.
Vicarious Liability:
This is the liability in which the employer is liable for doing any wrong things by the
employee within the business (Pinder-Ayres, 2019). The IOM solutions does not have to concern
about this liability because the sole trader business does not have the separate legal identity from
the proprietor. Hence, there is no concept of the vicarious liability in the sole trader organisation.
Business Liability in Negligence:
The liability of the individual in negligence for the damage is highly depended on the
existence of the duty of care. The consequences of the individual negligence is unending as it is
very high. The sole trader has the unlimited liability which means that the sole trader is solely
responsible for all the liabilities of the business.
Roles, Liabilities and duties of director:
In case of the sole trader company, the proprietor is considered and designated as the
director this means that there is no other director in the sole trader company. IOM solutions
company is sole trader and so therefore there is no director in this company.
Termination of Partnership:
According to the Partnership Act, 1980 has stated that unless there is no agreement, any of the
partner can terminate the partnership at any time by providing the notice to the other partners.
This notice does not compulsorily to be in written form and takes in effect immediately. IOM
solutions company is sole trader so there is no such termination of partnership.
Memorandum of Association (MOA):
Sole trader is the company in which the entire shareholding has been owned by the owner
of the company which is the single owner and company requires the Memorandum of
Association to be filled by the Registrar of the companies. MOA is the legal document which
provides the scope of the overall business activities of organisation as well as information about
shareholders (Anastasia, 2022).
Articles of Association (AOA):
This is the document which provides the regulations for the operations of company as
well as gives the purpose of the company. The IOM solutions company is sole trader so it is has
only one single owner therefore, there is no requirement of Article of Association.

The legal business structure of UK companies
Legal business structure comprises of the cooperatives, partnership, sole traders and other
entities. It is the category where the firm is legally identified within a given jurisdiction and it is
also characterised by the legal terms.
Sole trader: Sole proprietorship refer to the individual entrepreneur that run their business
individually, in this there are no such legal distinction in between the owner and the business
entity. Formation of this initiate with the simplest structure that is selected by the person in order
to run business, single owner design the blueprint of business and arrange all the resources.
usually sole trader is taxed from the personal tax that is return of individual (Sun, 2021). They
are subject to own income tax rate; they need to pay tax on the basis of the profits they have
generated every year. In UK basic tax rate is £1-£37,500(After taking off self-quota) that is 20
percent tax. In UK for the sole trader’s liability is unlimited, which means that unlike the holder
of the ltd corporation and sole proprietor is liable for their own business debts. Therefore, Sam is
sole trader and he is liable and responsible for the running of his IOM business. Dissolvency or
insolvency situation obtain when the sole trader is not able to meet the financial obligations. In
such it is important for them to pay all debts otherwise have to face the legal actions. Among all
of this sole traders are comprising of several benefits that are it is easy to set and individual can
retain all profits to them only also they are independent to make any decision. It has
disadvantages too which are there is unlimited liability and it is difficult to raise the funds, less
flexibility when it comes to tax.
General partnership: General partnership refer to the business entity that is generally comprises
of the more than one partners where they are agreed on running the business. It is an agreement
between the parties, for its formation it is important to satisfy such condition which is firm must
have the two parties or owner and all partners must need to agree over the unlimited own
responsibility for any debts and other legal liabilities (Ballardini, Ituarte and Pei, 2018). Usually
general partnership does not pay any income tax in this all profits and losses is generally passed
from the individual partners. Which means that each party reports their division of collaborative
income and loss on the basis of their personal tax return and to pay the taxes. Every partner in
this entity are equally responsible for their business and all are subjected to the unlimited liability
for their business debts. It also means when the partnership defaults over the loan payments then
personal benefit of partners can be liquidated for paying all debts. Dissolution in this happen

when there is such modification regarding the partner’s relation for their collaborative business,
it generally does not terminate the whole business. Its benefit is that it is easy to develop and
simpler or cheaper and generally not require more paperwork (Tsaregradskaya, 2022). Therefore,
if IOM company proceeded with this then they will be benefited for not experiencing simplified
taxes. It has disadvantages too which are that if one partner made mistake than other will also
responsible for the partner’s actions, disagreement can also develop and personal asset will
become vulnerable.
Partnership: It is the business form where more than one people share the equal ownership
along with the responsibilities in order to manage the business functions. It forms when two or
more parties sign the agreement and oversees all business operations. In UK income tax is
applicable for the partnership income is as similar with the employment income as progressive
rates are 20 percent, 40 and 45 percent, where the partners are taxed on the basis of their shared
profit. In UK Every partner have the joint liability under the act of partnership 1890, in this each
partner is not responsible to the action of other partner, based on the act partnership in UK is not
consider as the single legal entity (McKay and et.al 2019). In this dissolution is generally
covered by the Partnership act, with two parties of partnership can be dissolve automatically
when one of the member dies or resigns. If there is no specific agreement over the partner’s exit,
then partnership can be dissolve and wind it up. Advantages of partnership involves the better
decision making process as well as it is cost and time efficient, there is such more capital is
available for the business. Along with this there are lot of disadvantages too which are that
liability for the debts for business is unlimited, complexity in ownership transfer, lack of
regulations, limited capability for raising funds. It is suggested to IOM to proceed with this
strategy because of its various advantages.
Limited liability It is a business structure where the obligations for the owners are relatively
limited at the extent of the investment, in this owners are self-liable for the business’s losses and
debts (Lam, 2018). LLC generally forms by filing the articles for the firm and it is important for
the owner to register it. unlike the sole proprietorship LLC firms generally don’t pay any income
tax and otter national insurance. Instead they are required to pay the corporation tax on the basis
of the profit. Current rate for the corporation tax in UK for LLC is 19 percent. Regarding
liabilities for the LLC involves the total amount of debts that is incurred by the firm is the
company’s liability and there is no such direct legal liabilities for the shareholders and the owner

of the company. In this firm is treated as the single legal person from its directors. For the
dissolvency it is important to meet all the conditions and to seek for the approval. Advantages of
this is that it is convenient and there is no such capital requirement as well as lower registration
cost. Its drawback involves publically expose of the financials, no tax benefits.
Recommendation for IOM Solutions company-
The best and the most effective way for the IOM solutions for expanding its business is
by partnership firm. As discussed above, the partnership is the form of the business in which two
or more partners are involved for sharing their ownership, responsibility for managing the overall
organisation as well as the sharing the profits and losses which is generated by the company
(Waked). This will help the IOM solutions company to become more competitive as this will
provide the exposure to company, helps in providing the better product and service to its
customers as well as it will enhance the position of company in the highly competitive market
place. It has been identified that the partnership enables the company to grow much faster by
achieving the competitive edge.
There will be many benefits for IOM Solutions to adopt the partnership organisation type
as this will help in attracting the large number of the customers towards the company as well as
this will help the IOM solutions company for the creation of good relations with the leaders of
industry (Pruchno, 2019). The partnership organisation is considered as one of the best form of
the business for growth as this will help in increasing the knowledge, expertise as well as the
resources which are available to company and through which they ca make effective products
and reach large customers. This will help the IOM Solutions company to ensure that the
organisation has the products which are designed for the target market.
CONCLUSION
From the above report it can be concluded that it is very important for the companies to
follow the business laws. This assessment report has covered the nature and the overall
management of the company as well as the legal business structure. This includes sole trader,
general partnership, partnership as well as limited liability. The businesses and organisations in
UK has illustrated the termination of partnership, memorandum of association, Articles of
Association. Along with this, the best and the most effective organisation type has been
recommended to the organisation which can be used by them to expand the business.

REFERENCES
Books and journals
Anastasia, G., 2022. HOW TO START OWN BUSINESS?. In The science of the XXI century:
challenges of the contemporaneity [Еlectronic edition]: proceedings of the all-Ukrainian
scientific and practical student conference (Kyiv, May 12, 2022)–Kyiv: State University
of Trade and Economics, 2022.–406p.–English, German, Czech. (p. 28).
Ballardini, R.M., Ituarte, I.F. and Pei, E., 2018. Printing spare parts through additive
manufacturing: legal and digital business challenges. Journal of Manufacturing
Technology Management.
Lam, K., 2018. Behavioral Integration LLC a Business Plan. California State University, Long
Beach.
McKay, S. and et.al 2019. Understanding Business Structures, Markets, and Risk Management
Strategies.
Pinder-Ayres, B., 2019. Setting Up in Practice. In Financial Management (pp. xiv-10). RIBA
Publishing.
Pruchno, R., 2019. Technology and aging: An evolving partnership. The Gerontologist. 59(1),
pp.1-5.
Seddon, N., and et.al., 2021. Getting the message right on nature-based solutions to climate
change. Global change biology, 27(8), pp.1518-1546.
Sun, N., 2021. An Analysis of the Legal Status and Liability of the Anchor of Livestream
Marketing. International Journal of Frontiers in Sociology. 3(5).
Tsaregradskaya, Y.K., 2022. Municipal Debt in the Context of SocioEconomic Development:
Features of Legal Regulation. In Business 4.0 as a Subject of the Digital Economy (pp.
1047-1051). Springer, Cham.
Waked, S.S., The Partnership Experiences in Auditing Firms.
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