Business Law: Selecting a Business Type for IOM Solutions in UK

This report provides an analysis of business law in the UK, focusing on different types of business organizations and their regulatory frameworks. It examines sole proprietorships, general partnerships, limited liability partnerships, and limited liability companies, highlighting the advantages and disadvantages of each. The report refers to key legislations such as the Companies Act 2006, the Limited Partnership Act 1907, and the Partnership Act 1890. It includes a recommendation for IOM Solutions, a sole trader business looking to expand, suggesting that a limited liability company structure would be the most beneficial for future growth and financial stability. The analysis covers aspects like liability, taxation, decision-making processes, and the importance of adhering to legal and regulatory requirements for successful business operations in the UK. The report concludes that understanding and complying with business law is crucial for the sustainable development of any business organization.

Business law

INTRODUCTION
Business law can be defined as the governing body that regulates the reciprocation of
commercial operations among various business organizations in a country. The businesspersons
or the owners of these corporations are required to follow all the important rules and regulations
that are mentioned in various legislations that are enacted under the law. Business is a process in
which two or more persons are involved in a business transactions where buying and selling of
goods and services takes place in an open market(Deb, 2022) . All the activities of commercial
nature are governed by certain set of rules which are obligatory on both employer and the
employees or workers who are associated with any business organization. These activities could
be done through online and offline modes. As, during the period of pandemic, business is
running online because of restricted movement of people as well as goods. This report will
explain different forms of businesses that are present as an option for a small or medium scale
enterprise in order to preserve the growth factor and expansion of a company. Basically, it will
provide an opinion to Sam, a sole trader to select the best option from various types of businesses
in UK for the company, IOM solutions.
MAIN BODY
Business organization in UK
Business law acts as a governing authority that brings out an outline for the business
organizations regarding the conduct or a particular way in which a business is required to run. It
mandates to follow certain laws that are being created for the purpose of making the
organizations work accordingly without any deviation. It also focuses on maintaining a peaceful
relation between the workers and the employers. It poses a sort of responsibility on the owners of
the corporations to ensure a healthy working environment in the company or industries that are
related to any business(Hardman and Rowell, 2021). It provides a framework to the enterprises
that is required to be followed by them without any failure. It prevents all sort of irregular
activities in the organization with the employees. As the employees or workers are the most
important organ of an organization that gives hundred percent output in order to achieve the
desired objectives of a company. And for the implementation of all these rules, there are
different legislations that are being enacted by the law enforcing authorities of the country. This
would help in dealing with the disputes arises among the employees of an organization or

between the workers and the employer or between two other corporations. These legislations also
protect the rights of the workforce working under any organization. It also assure that the duties
of both employer and employee towards each other are being carried on by them or not. The
Companies Act, 2006 is an act that regulates the work and conduct of each and every company
that is operating its business in UK. The norms and provisions of the said law is required to be
followed by each employer and the employee. It ensures that every company must perform
according to the set rules and norms so that they can function in an efficient manner. There are
certain characteristics that are being stated by this act, they are, a company holds a distinct
identity than its members. It is a separate legal entity. For example- if a certain company suffered
any loss then it will not going to affect its members related with that organization such as,
shareholders, partners, employees, etc. A company can sue and could be sued on its name. In
case of any conflict, company can file a legal case in the court of law in its name and another
organization can also sue the particular company in the court regarding any dispute. It holds
perpetual succession which means that it would not get affected if any member leaves that
company in any circumstances. It will function like it was doing earlier(Segrestin, Hatchuel and
Levillain, 2021).
The two major documents that ensure proper functionality of a company are Memorandum of
Association(MOA) and Articles of Association(AOA). MOA provides a blue print of all the aims
and objectives of a company for which it has been set up. It also provides an insight vision of a
company. It also renders a brief introduction about the company and its framework based on
which it will going to continue its operations. The stakeholders of a company sign the
memorandum accordingly. Whereas, AOA provide information related to the work which is
done on the daily basis in a company. It gives a basic idea that what particular tasks are being
assigned to the employees. The norms and regulations that are present in MOA are mandatory on
both employer and the employee.
The concept of Vicarious liability talks about the master-servant relationship in which the master
is liable for the acts of his or her servant. It holds an accountability or answer ability towards the
employer if any employee or a worker commits any negligent act. Business organization will
become liable for the loss suffered by the third party. Director is a person who holds the top most
position in a company. An individual who is working in the capacity of a director takes every
important decisions of a company and along with that holds accountability of that decision which

has been taken for the firm. The reason behind this is that every decision affects the functioning
of the company. That is why a director should work in an appropriate way to take effective
judgements. Partnership firms are governed by Partnership Act,1890 that regulates its activities.
A partnership is formed by an agreement made between the partners. Minimum two individuals
are required to form a partnership. The provisions of the above act specifies the manner in which
the agreement is made. There are different categories of partnership, for example- general
partnership, limited liability partnership.
The legal business structure of UK companies
In United Kingdom there are different types of business exist which could be opted by any
company in order to maintain the growth rate and expansion of the company. IOM solutions is
an enterprise managed by a sole trader, Sam. After progressing well in past two years, Sam is
thinking to expand the business. For the same, Sam took help from a legal consultant who
assisted him choosing the best suitable form of business. Various types of businesses are-
Sole trader
A sole trader is the only owner of the company. It can also be named as sole proprietorship in
which a single owner owns and manages the business. There is no interference of any outsider in
the business activities. That is why this type of business is desirable. The owner have the power
to make the decisions on its own. Confidentiality is maintained in sole trading. A sole proprietor
need not to take any sort of permission or sanctioning from any one. The individual has to pay
taxes in its name and not in the name of the company(Škorić, 2020). There is no double taxation
system in this type of business. There are some demerits of sole trading, a single owner has to
give his whole time to the business where there is no time left for personal life. A sole proprietor
has to take all sort of pressure alone like, managing the finance, unlimited liability,etc.
General partnership
This particular form of business is very common in UK. It requires two or more individuals to
run a partnership firm where they will carry out the functions of the firm under a same name.
They holds equal share in profits and losses of the firm. They holds liability for the act of other
partner. This form of business also holds a concept of sleeping partner who invest the capital in
the firm(Mallor and Barnes, 2020). A sleeping partner cannot take part in decision making and
holds no share in profits and losses of the firm. Taxes are payable by the firm itself. Partners do

not hold any liability to pay any taxes. There is no or low financial risk involved in this form of
business. The partners have no pressure to arrange funds for the firm.
Limited liability partnership
It is regulated by the Limited Partnership Act, 1907. As the name suggests itself that the partners
holds liability to a limited extent than that of general partnership. The personal assets of the
partners are not used to pay for any kind of loss. They are required to bear the loss to a specified
limit mentioned in the agreement. But on the other hand, it also hold a disadvantage that the
decision making in such partnership get delayed as every partner must give their sanctioning to a
particular decision(Marson and Ferris, 2018).
Limited liability company
Limited liability company is governed by the Companies Act, 2006. Shareholders acts as the real
owners and posses limited liability. The taxation policy is not complex and it is paid by the
company only. Director manages the functioning of the company and takes every sort of
decisions for the betterment of the organization. The organization appoints the employees
according to the skills and area of interests they hold in order to place them in different
departments of the company(Tiwasing, 2021).
Recommendations for IOM solutions
From the above explanation, it is suggested that Sam must go with the option of limited liability
company for its enterprise that is IOM solutions in order to expand the existing business. It will
ultimately ensure growth and development of the company. The company would be able to find
more effective approaches to continue its financial activities. Sam will get a proper support from
the shareholders and other financial institutions for raising fund for the expansion of the
company. This will help in increasing the profit margins and sales of the business by improving
supply chains. As the company is already getting prefer ability from the customers, it just need to
maintain the same by selecting the best suited option. The workload and the pressure will be
released from one person's shoulder because if the company will expand, then it will hire more
employees to meet the demands of the market. This will help in distributing the work from the
top management to the subordinates. There is no double taxation system exists in this form of
business. The taxes are paid under the name of the company because it holds a separate legal
identity. Hence, it is observed that limited liability company will be proved as a better option for
IOM solutions.

CONCLUSION
The conclusion drawn from the above report is that business law acts as a regulator of the
business activities and provides the manner in which the companies need to undertake the
reciprocation of commercial operations. The business organizations are required to follow the set
rules and regulations that is provided by the various legislations, like, the Companies Act 2006,
the Limited Liability Act 1907, the Partnership Act 1890, etc. Moreover, it also discuss about the
different types of businesses that are present in UK which helps in the growth of a company. It
also covers the advantages and disadvantages which is attached with each type of business.
Mainly Sam wanted to expand its business and that is why, this report delivers the
recommendations for the company IOM solutions.
References:
Deb, E., 2022. International Business Law-Critical Review on Corporate Governance in
UK. Available at SSRN 4074105.
Hardman, J. and Rowell, N., 2021. The UK's director daisy chain: Empirical evidence of the
interconnectivity of directors of UK publicly traded companies. European Business Law
Review.
Segrestin, B., Hatchuel, A. and Levillain, K., 2021. When the law distinguishes between the
enterprise and the corporation: The case of the new French law on corporate
purpose. Journal of Business Ethics, 171(1), pp.1-13.
Škorić, S., 2020. The application of digital technology in business registration. Pravo-teorija i
praksa, 37(4), pp.1-12.
Marson, J. and Ferris, K., 2018. Business law. Oxford University Press.
Tiwasing, P., 2021. Brexit and skill shortages: An empirical analysis of UK SMEs. 739898418.
Mallor, J. and Barnes, A.J., 2020. Business law the ethical, global, and e-commerce
environment.