Business Law P4 & P5 Assignment: Business Types and Funding Strategies

This assignment provides an overview of business law, specifically focusing on different types of businesses and their funding sources. It begins by defining a business as a legal entity and then describes various business structures, including sole proprietorships, partnerships, private companies, and limited liability companies, highlighting their key characteristics, advantages, and disadvantages. The assignment then explores various funding sources, such as bank loans, personal income, financial institutions, investors, and funding from friends and relatives, explaining how organizations acquire capital for operations and growth. The content includes a reference list with books and journals. The assignment aims to provide a comprehensive understanding of business structures and the financial aspects of business operations.

Business law

P4 Types of businesses
A business is legal entity which provides various products and services to people. they have to follow
several rules and regulations. there are different types of business which exist within a nation. the
structure and size of business depends on its type. basically, they are described as below :
Sole proprietorship- It is a type of business in which business is owned by single owner. the person is
responsible for managing of entire business and taking decision. the profit earned is received by owner.
It is easy to set up legally this business. there is unlimited liability in it. Also, it is easy and less costly
to set up business.
Partnership – In this there are two or more than two persons involved in business. there is agreement
done between them on basis of partnership act. Alongside, in agreement it is written how decision are
made, profit is shared, etc. in addition, profit is shared on basis of agreement or investment made into
business. in this the liability of partner is limited.

CONT..
Private company – It is a business started by group of people for common objective. it is having
legal existence from others. The company is registered by share of stocks. in this liability of
stakeholder is limited. Moreover, stakeholder elect BOD who form goals and objectives. Private
company does not dissolve when ownership changes.
Limited liability company – this type of business is having feature of both partnership and company.
they are not incorporated as owner is having limited liability. It can be either a sole proprietorship,
partnership etc.
NGO- In this a business is set up for social cause. there is no aim of earning profit in it. moreover,
NGO are formed by private companies or an individual. the laws and regulations applied in it are
different from normal business. besides, they are run via funds obtained from various sources.

P5 How organisations are funded
An organisation basic requirement is capital. it is needed to set up a business and perform operations.
furthermore, funds is required to buy resources and running of its operations.. However, there are
various or sources through which funding can be acquired. they are explained as follows :
Bank loan- It is common source of funding as business can easily get loan from bank on basis of their
needs. here, bank charge interest rate on basis of loan amount over a fixed time period. However,
amount of loan depends on security deposited by business. Usually, interest rate is low as compared to
other source. But the process is time consuming.

CONT..
Personal income- Business can be easily managed through personal income. It consists of cash, land
or asset which is used within business.
Financial institutions- It is also a way through which organization is managed and funded. there are
many financial institutions that provide funds to business. for this they charge high interest rate as
compared to bank. But amount offered is more than security deposited. also, process of acquiring funds
is easy and less time consuming
Investors- here, fund is obtained from investors. they are those people who invest in business and
also take equity share capital in it. Usually, they expect high return on investment.
Friends and relatives – in this funds is obtained from relatives and friends. but here, funding is less as
compared to other source. this is useful and easier way to acquire and obtain funds for business.

REFERENCES
Books and journals
Diener, K.W., 2016. The Restricted Nature of the Profit Motive: Operspectives from Law,
Business, and Economics. Notre Dame JL Ethics & Pub. Pol'y, 30, p.225.
Epstein, R.A., 2018. A Common Law for the First Amendment. HARv. JL & PuB.
PoL'Y, 41, p.1.

THANK YOU