Business Law in the UK: Analyzing Company Structures & IOM Advice

This report provides an overview of business law in the UK, focusing on the legal structures available for companies and their implications. It discusses key legislations such as the Companies Act 2006, Partnership Act 1890, and Limited Partnership Act 1907. Various business forms, including sole proprietorships, general partnerships, limited liability partnerships, and limited liability companies, are examined, highlighting their advantages and disadvantages. The report concludes with a recommendation for IOM solutions to adopt a limited liability company structure for future growth and efficient financial operations, citing benefits such as reduced personal liability and favorable taxation. Desklib offers a wide range of solved assignments and study resources for students.

Business law
Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Business and Organization in UK..........................................................................................3
The legal business structure of UK companies......................................................................5
Recommendations for IOM solutions....................................................................................6
CONCLUSION................................................................................................................................7
References:.......................................................................................................................................7

INTRODUCTION
Business is a process in which an individual or a group of persons are engaged in one or the
other commercial activity, where one person sells the products and another buys that goods or
service. Business law encompasses with certain rules and regulations that governs business
operations which are being carried out by the organizations. Business could be done in online as
well as offline mode. Before the outburst of Covid 19, the reciprocation of the commercial
activities are majorly takes place in offline mode. But after the situation of pandemic, various
business operations have started function digitally. With the help of this, the business owners are
now able to supply their goods and services to the customers without any delay. The following
report discuss about various types of businesses that could be opted for sustaining growth and
expansion of any business organization(Nyoni and Hart, 2018). Along with this, the report will
also cover the advantages and disadvantages of the different types of business firms. In
furtherance, it also advised Sam who wants to expand its business that is IOM solution that
accordingly which type of business will be best suitable for the particular organization.
MAIN BODY
Business and Organization in UK
Business law functions as a regulating body which provides the manner in which the business is
required to be carried on by the various organizations. It provides certain legislations that are
obligatory on the part of business persons. It also helps in maintaining a healthy relationship
between the employer and the employees or the workers. It renders a structure that guides that
how business is needed to be operated. It controls the irregular activities that are unlawful in
nature to be held in any organization. As, employees are said to be one of the most important part
of any business enterprise. They must be protected from these sort of irregular activities done by
the employer. The employer should understand that employees are the assets for any company.
The employees or workers use to give their sweat and blood to an organization by working hard
in order to achieve the desired goal. They act as a support for the company. That is why, business
corporations are advised to follow all the rules and regulations that are provided by various
legislations(Beatty, Samuelson and Abril, 2022). For this reason, there are different laws enacted
in United Kingdom in relation to manage the businesses all over the country. It also ensures that
the rights of the workers should be protected against any harm or unlawful activities that could

be done by the employers of any organization. The Companies Act, 2006 is a legal tool that
renders various provisions which are required to be adhered by each and every company
operating its work in United Kingdom. It also offers various guidelines and rights and duties of
the employees and the employer towards each other. It covers every type of industries and
corporations that are performing its activities in the particular country. In order to function
efficiently, every business firm must follow all the mandates of the Companies Act,2006.
According to this act, a company posses various features, such as-
 A company is a separate legal entity. It means that it holds a distinct identity than that of
its owners. For example- if a company bears any loss then the members associated with
that company like, employees, partners, directors, shareholders will not get affected.
It holds the power to sue and could be sued by any individual as well as by any other
corporation.
 A company enjoys perpetual succession that is its existence will not get affected if any
member connected with it exit that particular firm. It can continue its operations even
after the removal or admission of any shareholder, partner, manager or a director.
A company’s functioning is depends upon two major documents, that is Memorandum of
Association (MOA) and Articles of Association (AOA). MOA states the objectives and aims
of a company. It also provides an insight regarding the company’s framework which is
responsible for achieving the long term goals of the company. It is required to be signed by
the shareholders of a company. On the other hand, AOA provides the structure in order to
perform day to day chores of a company. It renders that how the tasks assigned on the daily
basis should be performed. All the rules and regulations mentioned in AOA are obligatory on
the part of each and every member associated with that company.
Vicarious liability poses the responsibility of any wrongful act done by the employee or worker
towards employer of a company. Employer will be held liable for the negligent acts done by any
employee. It can also be stated as a master-servant relationship. The company will be responsible
to pay any damages to the aggrieved party who is affected by that act. The director holds the top
most position in a company(Jarwal, 2020). A director is required to take every important
decisions regarding the company and will be held accountable for the same. An individual enjoys
the power and authority which is being allotted to its position as a director. Every single decision
of a director influence the management of a company so it is essential for an individual who

holds this position to take the decisions in an effective and efficient manner. Another regulation
is Partnership Act, 1890 which regulates the functioning of a partnership firm. All the firms that
are established under a partnership of two or more people are required to follow the provisions of
the above stated act. There are various types of partnerships given under the act. Like,
partnership, general partnership, limited liability partnership, etc.
The legal business structure of UK companies
There are various types of business forms in United Kingdom that could be opted by any
company in order to grow its business and in need of expansion. IOM solutions is a single owner
company which is managed by Sam itself(Majmudar, 2021). The company has performed really
well in past years which made Sam realize that now it is important to enlarge its business
operations that he should go for selecting an appropriate form of a business. Then, Sam took an
assistance from a legal advisor who consulted him in every possible manner in order to help in
choosing a correct form of business. Different types of business forms are discussed below-
Sole trader
The name itself suggest that sole trader means the person who is a single owner of its business. It
is also known as sole proprietorship. This type of business is preferable for those who wants to
carry on their business without any intervention of other people. This helps in maintaining the
secrecy in business and a sole owner can take its decisions on their own. They are not required to
take any kind of sanctions or authorization from any other third person. The taxation system is
also favourable for the owner as an individual is required to pay the taxes under his name and not
in the name of his firm(Rye, 2020). This form of business is easy to function. But on the other
hand, there are some disadvantages attached to it, such as, a sole trader has no time for his
personal life including family and friends. A single owner is liable to bear all the burden and
pressure alone. Along with that, a sole proprietor is responsible to arrange the funds for the
business. An individual who is working in a capacity of a sole trader holds unlimited liability of
the company.
General partnership
This type of business is commonly seen in United Kingdom in which two or more persons agree
to perform their obligations in terms of carrying out the various operations of the firm at a
particular place and under the same name. All the partners are liable for each other’s act. They

posses equal share in liability of the firm. Other then the partners, there is also a sleeping partner
whose work is to make investments in the firm. The sleeping partner cannot take part in the
activities and in the process of decision making in the firm. The taxation system is not complex
as the taxes are imposed on the partnership firm as a whole. The partners are not liable to pay the
taxes on the individual basis. There is no burden of managing finances among the partners as
everything is equally divided between them. if compared from sole trading, the partners of a
partnership firm get more time to enjoy their leisure time. The partners are jointly liable for the
losses occurred, like for example- if any partner suffered loss in the business then all the other
partners will equally share that loss. There is less financial risk involved in this particular form
of business(Formosa, 2018).
Limited liability partnership
The Limited Partnership Act,1907 governs limited liability partnership. The partners under this
form of business share liability to a limited extent if compared with general partnership. This
basically means that if any loss suffered by the business, then the partners are not required to sell
their personal belongings or assets to cover the loss. They all will contribute to the loss but to a
certain limit which is already being set in the partnership agreement. There is also a disadvantage
of this form of business, the decision making process is not quick and get delayed because each
and every partner’s consent is important to make any decision.
Limited liability company
The Companies Act,2006 regulates limited liability company. The shareholders carry limited
liability. The company holds a distinct identity before the law. The taxes are paid by the
company. Some of the shareholders are the actual owners of the company. The administration of
the company is managed by the director who is accountable for the growth and development of a
business organization. The company is required to hire the other personnel according to the skills
that is needed for various departments of the business corporation(Lukashov, 2020).
Recommendations for IOM solutions
From the above discussion, it is recommended that IOM solutions should choose Limited
liability company in order to expand its business and to ensure future growth of the business. It
will also provide efficient ways in order to carry out financial operations of the business firm.
Sam will be able to get less return finance support from the stakeholders which would ultimately

helps in enlarging the business. The business will going to progress in number of ways, may it be
sales, supply chain, profit margins, etc. The burden and workload will be less as compared to
sole trading because after opting for limited liability company, the staff will also increase. There
would be no double taxation rule in this type of business as the taxes are paid separately by the
company. So, accordingly limited liability company will be the best suitable option for IOM
solutions.
CONCLUSION
The conclusion drawn from the above report is that business law governs the manner in which
the companies are required to carry on their day to day business operations. There are various
legislations that are being enacted in this context, such as, the Companies Act 2006, the
Partnership Act 1890, the Limited Liability Act 1907, etc. Further it also explains about the
different forms of businesses that are available in United Kingdom in order to ensure growth and
expansion. It also mentioned certain merits and demerits of various business forms. The report
has suggested IOM solutions to opt for limited liability company for expanding its business.
References:
Nyoni, E. and Hart, T., 2018. The Concept of Limited Liability and the Plight of Creditors within
Corporate Governance and Company Law: A UK Perspective. InterEULawEast: journal
for the international and european law, economics and market integrations, 5(2), pp.309-
322.
Beatty, J.F., Samuelson, S.S. and Abril, P., 2022. Introduction to Business Law. Cengage
Learning.
Majmudar, S., 2021. The Era of Limited Liability Partnership. Issue 3 Int'l JL Mgmt. &
Human., 4, p.4584.
Jarwal, D., 2020. Limited liability partnerships: A business model to achieve entrepreneurial
efficiency. JIMS8M: The Journal of Indian Management & Strategy, 25(3), pp.13-20.
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.
Formosa, A.M., 2018. From a sole trader to a company: a legal and financial analysis (Master's
thesis, University of Malta).
Lukashov, R., 2020. Limited liability company as a private legal entity: selected legal
issues. Actual problems of law, 1(4), pp.187-194.
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