BMP4002 Business Law: Legal Sources & Business Organisations in the UK

This report provides an overview of the legal context for business organizations in the UK, focusing on key sources of law and different business structures such as sole proprietorships, general partnerships, limited liability partnerships, and limited liability companies. It references the Companies Act 2006 and the Partnership Act of 1890, explaining the implications of each structure. The report also includes recommendations for IOM Solutions, suggesting that a limited liability company would be the most suitable structure for their future growth. The document concludes by emphasizing the importance of understanding business agreements and the UK tax system for effective business management. Desklib offers this report as a resource for students studying business law, along with a wide range of past papers and solved assignments.

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:
1

Contents
Introduction………………………………………………………….p
Businesses & Organisations in the UK……………………………p
The legal business structure of UK companies……………………p
Recommendations for IOM Solutions……………………………..p
Conclusion…………………………………………………………..p
References…………………………………………………………..p
2

Introduction
Business is the process by which products and services are exchanged between
individuals. The market is a place where buyers and sellers trade goods and
services. The customers pay a specific amount for these goods. The operations of
the businesses that are run across the nation are essentially governed by business
legislation. It offers specific standards or guidelines that every commercial enterprise
must abide by when conducting business. These guidelines are crucial for
developing a code of conduct for firms so that they can conduct business activities
successfully(Eckert, Crommentuijn-Marsh, and Black, 2022). Business law offers a
variety of laws, including those pertaining to taxation, employment, and other areas.
The paper that follows discusses different kinds of legal business structures used by
corporations in the United Kingdom.
In addition, it offers some recommendations to IOM Solutions, a privately held
company that plans to grow its clientele in the future(Degryse, Matthews and
Zhao, 2021).
Businesses & Organizations in the UK
Commercial law is a strategy that allows a company to choose its code of conduct
and how they must conduct their business operations. This particular area of law
explains how an employer must keep good connections with the workers who are
employed by or affiliated with the organisation. Additionally, it aids in ensuring a
secure workplace for the workers, one in which any abnormal behaviour on the part
of the employer is strictly forbidden. Any firm must recognize the value and
importance of each and every one of its employees (DJOBLE-D’ALMEİDA, Boye and
D’ALMEIDA, 2022). They sacrifice their blood and sweat for the organisation and put
in a lot of effort to help it reach its goals. The productivity of the workforce
determines the company's success. The organization's rules and regulations, which
are binding on all employees, must also be followed by the employees. In order to
prevent any form of legal repercussions, this is crucial. Additionally, these rules
outline some rights for employees in the event that their employer engages in illegal
behaviour against them. In the event that any of these rights are violated, they may
seek redress in a court of law. For businesses located in the United Kingdom, a legal
3

framework is provided under the Companies Act of 2006. The rules outlined in the
Act must be followed by commercial entities(Audretsch and Belitski, 2020) .
Basically, the Companies Act controls how businesses are formed and dissolved
This law states that the firm has a separate legal identity from its members. Both it
and other companies have the right to sue. In terms of any liability, a business entity
is responsible for repaying the debts or loans. The company has standing to sue and
be sued in UK civil courts. Additionally, there is an endless succession in the case of
the corporation(Saxena, et.al, 2020). It means that the company should continue to
operate after the death of any stakeholder. Additionally, the business may still be in
operation and survive even if a stakeholder of the institution were to be admitted or
dismissed. It also has a separate name and independent identity for its legal
purposes.
A master's accountability for an employee's work is referred to as "vicarious liability."
This connection resembles a master-servant one. As a result, the boss is
accountable for any employee disobedience. This could imply that the institution
must pay claims for damages resulting from actions taken by employees while
carrying out their tasks for the business. The manager actually owns the company in
full. The institution's manager is also required to explain any important decisions. In a
sense, the director acts as the executive branch's leader. The institution's director is
consequently given a number of authorities. All necessary business actions must be
completed by the director(Kachouri, Salhi and Jarboui, 2020). The staff of the
organisation is therefore impacted by every leadership decision. As a result,
management must decide in a way that benefits the company.
Partnership businesses are governed under the Partnership Act of 1890. These
companies also have to abide by the rules set forth in the partnership law.
Additionally, every organisation uses two primary papers for functioning. The
institution's long-term objectives in the MOA, or Memorandum of Association, the
goals and objectives are described. This must be appropriately signed by the
shareholders of the institution. It offers details regarding the basic framework that
controls the institution's behaviour in the market. In contrast, the Article of
Association (AOA) describes the standard operating procedures and working
circumstances for institution staff. It provides details on the accepted norms, rules
and policies that all employees and members of the organization require to
follow(Travis, 2019).
4

The legal business structure of UK companies
Sole Trader-A sole trader is an individual who owns and runs their own business in
the marketplace. A sole proprietorship is someone who runs their own business in
the marketplace. Being a single proprietor has several benefits, but discretion and
hasty decision-making are its key benefits. Being the sole proprietor allows the
individual to act swiftly because he is not dependant on the approval of anybody else
.A sole proprietor also incurs the same tax expense. This implies that the business
must file its taxes as a sole proprietorship(Venturelli, et.al, 2018).
In the context of the problem, this wouldn't be taken into account. The sole proprietor
has benefited in many ways. Running a solo dealer business in the market is too
easy. The sole proprietor, on the other hand, struggles with a shortage of personal
time. This is because the involved company is always given time. Being a solo
proprietor also comes with the disadvantage of having unlimited responsibility within
the business and having to arrange their own funding.
General Partnership-The most common sort of partnership firm in the UK is a
general partnership. In this, at least two different individuals have made the decision
to conduct business with a similar name. Consequently, all of the partners can
control the business partnership. But there are certain circumstances where the
sleeping partner in the partnership corporation is present. The sleeping partner
would only make investments in the partnership business and would not be involved
in any other business activities (Davis, 2021).
When a partnership firm is involved, the risk is smaller. This is due to the need that
all partners in a partnership firm have joint responsibility for all business operations.
Compared to a solo proprietorship, it allows the partners more time for their personal
lives. The tax is likewise applied to the partnership business, though not individually.
The financial burden in the partnership business is also shared by both partners.
Therefore, more than one individual is needed to discover a source of finance. It
appoints all administration partners joint liability in a partnership-related matter. If any
partner causes concern in its transactions, it would indicate that all of the partners of
that specific organisation would pay the price. The risk to the funds is minimal in this
type of corporate organisation.
5

Limited liability Partnership-Partnerships with limited liability are governed by the
Limited Partnership Act of 1907. Limited liability partnership firms are another variety
that provide less accountability than standard partnership firms. To a certain extent,
partners in this firm have limited responsibilities. This means that neither partner will
have to sell their personal assets to pay their debts if the partnership business
experiences a loss(Giupponi and Xu, 2020). The disadvantage is that decision-
making takes longer in a partnership firm since important decisions must be
approved by all partners.
Limited Liability company- The Companies Act of 2006 governs companies with
limited liability. Each stakeholder in this form of business is subject to limited
responsibility. Gains and losses incurred by the company are the shareholder's
responsibility. The business is viewed by the law as a distinct legal entity. There are
several shareholders that are the actual proprietors of the corporation. They also use
the firm to pay their own taxes separately to the national taxing body. In a
corporation, shareholders are free to live their personal lives(Rye, 2020). The
company's director is in charge of the company's expansion in the market. However,
businesses must also hire more staff for their organizational skills division in addition
to other staff. However. Liability is restrained in these types of businesses. The top
management must make the choices that are best for the company. It would also
develop policies for its workers to follow in order to complete the task allocated to
them within the given timeframe(Cribb,
Miller and Pope, 2019).
Recommendations for IOM Solutions
The limited liability corporation could be chosen for the IOM Solution. This option is
suggested since it gives the business an easy way to get operating funds.
Sam will get a lower financial return from shareholders so that he can expand his
company. San will, however, benefit from feeling less stressed as a result, allowing
him to spend more time with his loved ones. Due to the company's limited liabilities,
Sam also gains from this. Additionally, the collaboration enables the business to
expand its operational staff. The company will be able to generate more, which is
necessary for market expansion, by taking on additional workers. The company also
6

provides UK tax authorities with tax payment advantages. There will be a cheaper
rate of interest on financing compared to other commercial contracts in the country.
The company provides aid in locating potential avenues for market expansion. A
limited liability company is the best option for IOM Solutions. As a result, it must
select a limited liability company.
Conclusion
This essay's conclusion goes through how business agreements are created and
executed in the United Kingdom. A list of the many businesses forms that may be
used in the UK will also be provided by this study. The benefits of corporations,
partnerships, and sole proprietorships would also be covered in detail. In addition,
Sam establishing a Limited Liability Company as a corporate strategy for the sole
proprietorship IOM Solutions would be covered in the paper's conclusion. It would be
the best option available for the business IOM Solutions to choose. This paper would
also summarise numerous other negative aspects concerning the UK business tax
system. We come to the conclusion that Sam needs corporate support to manage
the business arrangement.
References
Eckert, C., Crommentuijn-Marsh, P. and Black, S., 2022. The role of networks in
supporting
micro-and small-sized sustainable fashion businesses. Sustainability: Science,
Practice and Policy, 18(1), pp.544-559.
DJOBLE-D’ALMEİDA, A., Boye, E.G. and D’ALMEIDA, M.D., 2022. Empowering
small
businesses in a pandemic: Governance of cross-sector responses. Journal of
Ekonomi, 4(1), pp.14-20.
Saxena, N.,et.al, 2020. Impact and key challenges of insider threats on organizations
and
critical businesCribb, J., Miller, H. and Pope, T., 2019. Who are business owners and
what are they doing? (No. R158). IFS Report.ses. Electronics, 9(9), p.1460.
Kachouri, M., Salhi, B. and Jarboui, A., 2020. The impact of gender diversity on the
relationship between managerial entrenchment and corporate social responsibility:
evidence from UK companies. Journal of Global Responsibility, 11(3), pp.197-217.
Venturelli, A.,et.al, 2018. The state of art of corporate social disclosure before the
introduction of non-financial reporting directive: A cross country analysis. Social
responsibility journal.
Davis, G.F., 2021. Corporate purpose needs democracy. Journal of Management
Studies, 58(3), pp.902-913.
Giupponi, G. and Xu, X., 2020. What does the rise of self-employment tell us about
the UK
7

labour market?. London: Institute of Fiscal Studies.
Rye, J., 2020. What is the difference between a sole trader and a limited company?.
In Setting
Up and Running a Therapy Business (pp. 132-134). Routledge.
Cribb, J., Miller, H. and Pope, T., 2019. Who are business owners and what are they
doing? (No. R158). IFS Report.
Audretsch, D.B. and Belitski, M., 2020. The limits to collaboration across four of the
most
innovative UK industries. British Journal of Management, 31(4), pp.830-855.
Degryse, H., Matthews, K. and Zhao, T., 2021. Relationship lending, trust, and SME
bank
financing in the UK (No. E2021/24). Cardiff Economics Working Papers.
Travis, A., 2019. The organization of neglect: Limited liability companies and housing
disinvestment. American Sociological Review, 84(1), pp.142-170.
8