Analysis of Different Business Organizations & Recommendation for Sam

This report provides a comprehensive analysis of different types of business organizations, including sole proprietorships, partnerships (general and limited), limited liability partnerships (LLPs), and limited companies. It discusses the advantages and disadvantages of each type, along with the steps involved in their formation. The report covers key aspects such as legal requirements, ownership structures, liability, and taxation. Specific attention is given to the processes of establishing each type of business, including registration, agreement formation, and compliance with relevant regulations. The report concludes with a recommendation for Sam, advising the conversion of the business into a limited company to enhance brand image, attract investment, and facilitate global expansion. This analysis is crucial for understanding the landscape of business structures and making informed decisions about the most suitable organizational form.

Business Organizations

Table of Contents
INTRODUCTION................................................................................................................................3
MAIN BODY.......................................................................................................................................3
Sole trader........................................................................................................................................3
Partnership.......................................................................................................................................4
Limited liability partnership (LLP)..................................................................................................4
Limited company-............................................................................................................................5
RECOMMENDATION........................................................................................................................6
CONCLUSION....................................................................................................................................6
REFERENCES.....................................................................................................................................6

INTRODUCTION
Business organisation is a term which elaborates that how commercial enterprises are run
their functions and how this working can helps them to achieve their set goals and aims. Basically,
business enterprises are formed to generate profit which can helps an individual or group of people
to enhance their livelihood. Organisation can improve the society present around their surroundings.
(Januarita, 2021). Furthermore, If the main aim of an organisation is to earn money then it is a profit
oriented organisation whereas if the firm is focusing on changing the current society through arts,
education then they are known as known non-profit organisation but it is not refers as business.
Different stages of business organisation are present in today's world that includes companies
establishment, ownership and operations. Business organisation helps an organisation to get the
knowledge of laws regarding their specific field. Every state and federal government has created
various rules and regulations which has to followed by the organisation present in their nation.
(Remedio Marques, 2018)
MAIN BODY
Selecting business organisation is one of the most crucial choice which has to be made by an
individual before forming an organisation. The most effective and appropriate selection of business
type regarding the company will decide its future growth and success. Before creating a company
an organisation should select the correct type of business organisation which have the similar goals
and aims that will make them easy to run their business operations. There are various pros and cons
related to each business organisation types which has been discussed below:-
Sole trader
A sole trader is one of the easiest form of business organisation which has limited or normal
legal rules and regulations present between the business entity and the powerful individual. It is a
type of organisation where only one owner is present which have the full authority of taking the
decision and running the function related to their business by itself only. This type of business
organisation is popularly chosen by those individual who want to start a small business because it
takes a very limited low cost for its constitution. They are also refereed to low taxes and regulations
as compare to other form of business organisation. (Kim, Lee, and Sohn, 2020.)
Advantages
 For starting a sole trader firms, a person follows a very limited amount of rules and

regulations that includes business license.
Disadvantages
 The director of sole trader cannot easily transfer its ownership to anyone else.
The process of generating a sole trader firm are as follows:-
Step 1- In starting, an individual should select a specific and attractive name for its organisation.
Step 2- After selecting a name, an individual should have employer identification number( ENI)
which will help them to distinguish their firm while paying the taxes.
Step 3- They should have a bank account for all the legal transactions.
Step 4- Various states present in United kingdom have different rules and regulations. A person
should have to follow the guidelines of the region where they want to start their business.
Partnership
This types of business organisation are classified into 2 parts that are named general and
limited partnership. General partnership refers to a specific kind of collaboration where all the
owners invest their money, assets, liabilities etc. in the company but all of them are 100% liable of
business debt. General partnership does not require a legal agreement. Thus, it can be created by the
the verbal form or personal understanding between the 2 business owners. On the other hand,
limited partnership required a formal agreement between the entities for its formation. The partners
should file a partnership certificate which Is required in their specific region. This kind of
partnership allow all its owner to face the business debts according to their specific amount of
ownership and investment.
Advantages of Partnership
 Each partners present in this kind of organisation enjoy the particular amount of
profit earn by the business as per their specific share present in the company.
 It requires little amount of money to establish a business partnership which includes
both general and limited. (Lobo, and Bhat, 2022)
Disadvantages of partnership
 One of the biggest cons related to partnership is that each partner present in an
organisation have to face the 100% loss and debts occurs in the company.
 Partnership will end if anyone of the partner decided to destroy or dis-continue the
ongoing agreements. No one can replace the old partner. If this happens, it needs a
new partnership agreement between brand-new partners for re-starting the business
operations.

The process of generating a partnership which is being discussed below:-
Step 1- Company name, all the partners should select a unique name for their business
organisation. Partners should select build a distinguished brand identity by their selected name
which can help to attract the customers of new market. (Januarita, 2021)
Step 2- After selecting an appropriate name for their company, now the owners should
register their firm in HMRC. It is a government department present in UK which is responsible for
doing the business firms registration.
Step 3- In this step, the owner of the company should have the complete knowledge of their
business and while they are establishing or forming the firm.
Step 4- Complete information of partners should present that includes their PAN card,
address, and many more personal details.
Step 5- Deposits. Complete details of various kind of investments done by each partner
should be included in the legal agreement.
Step 6- After completing all the legal formalities, this requirement occurs which states that a
company should select the appropriate type of management to run the business operations.
Step 7 – It is one of the most important step in forming a partnership firm because it states
that how much share of profit and loss will be distributed between the current partners.
Step 8- Resolution should be sign by every partner after forming a partnership firm. After
this, quitting of any partner will not effect the business operation by this resolution. If any conflict
arises and one partner discontinue its partnership then its share will be distributed between the other
partners in equal amount. (.MEHTA, 2021)
Limited liability partnership (LLP)
It is kind of business organisation that states that the partners present has limited amount of
money that they can invest in the business. Generally, all partners present in these firm invest
fixed amount of money and have equal share of company. The LLP companies should be registered
at companies house and also with HMRC. They should have have to prepare annual account of
sales and revenue done by their business. The LLP companies can be form by 2 or more members
and those members can be individual or a group. Members responsibilities and power are set out in
an LLP agreement and all those member should deposit their personal assessment tax return every
year, pay taxes on their financial gain regarding their respective share present in the company and
pay federal protection to HMRC. (OLAJUMOKE, 2021.)

Advantages of Limited Liability Partnership
 Limited liability safeguard the partners personal assets from the liabilities of the
company. This kind of business organisation separate legal entity of the current
members.
 The function of the company and distribution of profit is classified by the written
agreement which is present between the owners.
Dis-advantages of Limited liability Partnership
 The disclosure of financial accounts publicly has the main dis-advantage of LLP. The
company should have to disclose its all financial account to companies house for the
general public record.
 At-least 2 member's should be there to form Limited liabilities partnership. If one
member is not agree to continue the partnership then they have to dissolve the
partnership.
 The personal details of the partners will be disclosed to the general public. Because,
the partners have to submit all of its personal detail to the Companies House from
where the public can easily take the information of the company. (JENKINSON,
2020)
The process of forming a Limited liabilities partnership firm which is being discussed below:-
Step 1- Choose a name for the new limited liabilities partnership company. The name which have
been selected for LLP cannot be similar to the existing LLP company.
Step 2- After selecting a brand name, the members have to register their firm in Companies house.
Step 3- LLP firms should have at-least 2 members which are refers as designated members of all
time.
Step 4- LLP agreement- This kind of partnership determine to generates a members agreement.
Thus, it is not legally required to sign this kind of agreement, but it helps the business to work
smoothly and minimise any conflicts which may occurs between the partners. (Pandey, 2021)

Limited company-
This kind of companies are generally managed, run, operates by its own shareholders and
the official directors. This kind of companies have separate legal entity and they have their private
rules and regulations regarding their business functionality. This refers that the limited companies
are the one which is responsible for every issues arises in their organisation. All the profit which is
made by the limited companies are been distributed to shareholders in the way of dividend.
Advantages of Limited company:-
 An individual's both personal and professional status will enhance If they start
trading as a limited company. Limited companies have much more complex system
of rules and legal compliance are more larger as compare to other organisation.
 In current time, limited companies of UK are paying only 19% of corporation profits
which is very less as compare to other type of organisation such as sole traders which
are paying almost 45% of tax. That it why, this firm have greater flexibility on
panning their tax policies.
Dis-advantages of limited companies
 An individual must require to pay an incorporation fees for the registration of their
company to Companies house. If an individual is booked in any legal charges such as
bankrupt etc. then they cannot start limited company.
 Proper accounting should be maintain in this kind of companies which are very time
consuming and complex procedure. They should have to appoint skilled labour for
conducting only these kind of business activity.
The process of forming a Limited company:-
Step 1- An individual should have to check all the legal rules and regulations related to a limited
company before establishing a new firm.
Step 2- After gaining the complete knowledge, an individual should decide a new name for its
brand which distinguish them with other players in their market field.
Step 3- It is one of the most important part in the formation of limited company, in the higher
authorities have to choose director and company secretary who will run and manage the company
operations.
Step 4- After this, the authorities should decide the stakeholders will be their in the new company.
Step 5- The authorities should develop the agreement which show's that how company will run

their operations. (Sosner, Balzafiore, and Du, 2018)
Step 6- Register the company and start the productions.
RECOMMENDATION
It has been advised that the Sam can converts its business into limited company. This will
help them to build a strong brand image in their respective market field. If they have the label of
private limited company then they can attract new customers base which will help them enhance
their future growth and productivity. Sam can operates its business function all around the world
because it is easy for the limited company to establish their business across the globe. If they
have, registered as an limited company it can help them to get the investment because it creates
more loyalty and trust in the mind of investors. (Brajcich, 2019)
CONCLUSION
From the previous report it has been concluded that, business organisation is kind of
structure which help the companies to select the appropriate business structure which will help them
to smoothly run their business. Their are various types of business organisation are present such as
sole trader, partnership, limited liabilities partnership and limited company. The pros and con
related to all of these business organisation types are been summarized in this above file. At last, the
recommendation to Sam for its business IOM solutions is been given in this report.
REFERENCES
Januarita, R., 2021. The Newly Sole Proprietorship as Limited Liability Company in Recent
Indonesian Company Law. MIMBAR: Jurnal Sosial dan Pembangunan, 37(1), pp.221-231.
Kim, H.J., Lee, B.K. and Sohn, S.Y., 2020. Comparing spatial patterns of sole proprietorship and
corporate payday lenders in Seoul, Korea. The Annals of Regional Science, 64(1), pp.215-
236.
Lobo, V.S. and Bhat, K.S., 2022. Sole Proprietorship to Private Limited Company-A Journey of
Daijiworld Media Private Limited. International Journal of Case Studies in Business, IT
and Education (IJCSBE), 6(1), pp.14-25.
MEHTA, D.A., 2021. PERFORMANCE ISSUES at Jaipur Engineering Limited. HR
Future, 2021(6), pp.44-46.
OLAJUMOKE, O.T., 2021. USAGE OF COMPUTERISED ACCOUNTING SYSTEM IN
MANUFACTURING ORGANISATIONS IN ONDO STATE (Doctoral dissertation,
Federal University of Technology, Akure).
Pandey, M.K., 2021. Partnership Firms and Agreement. Supremo Amicus, 24, p.811.
Sosner, N., Balzafiore, P. and Du, Z., 2018. Partnership Allocations and Their Effects on Tax-Aware
Fund Investors. The Journal of Wealth Management, 21(1), pp.8-17.
Brajcich, A.M., 2019. Disposition of an Interest in a US Partnership by a Foreign Person: The Saga

of Revenue Ruling 91-32. The ATA Journal of Legal Tax Research, 17(1), pp.1-8.
JENKINSON, M.W., 2020. The audit of a public limited company. The Evolution of Audit Thought
and Practice, 18.
Remedio Marques, J.P., 2018. The Former Spouse of a Member of a Limited Company Acquires the
Status of Partner of That Commercial Company, Namely for the Purpose of Requesting
Judicial Investigation of the Acts of the Company. Bol. Fac. Direito U. Coimbra, 94,
p.1351.
Januarita, R., 2021. The Newly Sole Proprietorship as Limited Liability Company in Recent
Indonesian Company Law. MIMBAR: Jurnal Sosial dan Pembangunan, 37(1), pp.221-231.