Business Law Report: Analysis of Business Structures in UK

This report provides an overview of business law in the UK, focusing on different types of business organizations such as sole traders, partnerships, limited companies, and limited liability partnerships (LLPs). It discusses the advantages and disadvantages of each structure, highlighting key legal considerations and compliance requirements. The report also includes a recommendation for IOM Solutions, suggesting a transition to a limited liability partnership to facilitate market exploration and revenue growth while limiting liability. The analysis emphasizes the importance of understanding the UK legal system for ensuring business growth and compliance.

Business Law
Assessment 2

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Businesses & Organisations in the UK.......................................................................................3
The legal business structure of UK companies...........................................................................4
Recommendations for IOM Solutions........................................................................................7
CONCLUSION ..............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business law is the law which provides rules and regulations to control the business
conducts. In context of UK, it has a wide variety of legislation on business . Business is a wide
term it is also known as mercantile or a company law. The activities and operations are covered
within the legal framework of UK. There are other laws also which compliment the business law.
Business organisation is the association of various units which assist in running of business.
Business law provides various types of business setups to the person who as per suitability
commenced (Bruner, 2018). The types of businesses such as , partnership, sole trader, limited
liability company etc. are the common business setups which the person has established to earn
profits. This report will present the different alternatives of business an person can opt for
expanding his business along with the relevant recommendation will be made for the given
organisation.
TASK
Businesses & Organisations in the UK
There are various kinds of businesses operating in United Kingdom which are covered under
business law. A business organisation is a structure of different departments such as finance
department, human resource department, , accounts department, and marketing department and
many more. There are so many business faculties which are associated with the business are the
force of a business. The employees of business are covered under employment law , which gives
various rights to employees such as minimum wages, leave rights, rights against discrimination,
maternity leave, etc. According to the company law a company is a separate legal entity or a an
artificial person which has separate identity and a company can sue or be sued in case of
disputes in its own name. Company law also covered in business law. The laws are made to
make the commercial work easy and fair. These laws directs the organisation to run the business
in a systematic way as per the laws. Any business who is not complying with the business law
will have to face huge penalty in monitory terms. In business law employers are obliged and
duty-bound to perform certain acts in the interest of its employees. Businesses contributes in
economy ,therefore there are several rights and benefit given to businesses as well to elevate
them an helps in expanding the operation beyond United Kingdom (Corsi, Feranita and De

Massis, 2022). A business setup or formation requires certain procedure to be followed. A
legitimate business is one who has the certificate of incorporation. It is mandatory to registers the
business. The mind of a business is the directors who take the essential decision for the business.
A director of a business should be open and has the good knowledge and wisdom about the
business. A business objectives and goals are documented in the form of article of association
and memorandum of association. Memorandum of association mentions the external relations of
a business whereas the article of association describes the internal duties of the company. The
various type of organisation are defined under the UK legal system and depends on nature and
size of the business.
The legal business structure of UK companies.
In UK legal system, there are four kinds of business organisation and each are varies
according the size, type and function. The business organisation helps in the economic growth of
the UK country. The legislative framework ease the operation of such type of businesses. The
procure and formalities for incorporating various types of businesses is outlined under various
laws and regulations. It is discussed in details below:
Sole Trader: It is a simplest and easiest form of business which is owned, managed and run by a
single person. The owner enjoys all the profit and loss earned by a business. Sole trader is
responsible to bear all the risk and liabilities suffered by the business. It includes business like
retail store, fruit seller etc.
Advantages of Sole Proprietorship are :
 Less Formalities: It involves less legal formalities to incorporate a business. As it is
managed by the single individual, so the procedure is simple and easy. It is not
compulsory to register a sole proprietorship and can be made in written or oral.
 Profits and Rewards: The sole trader has complete ownership over their business and
fully entitled to enjoy profits and rewards from the business activities (Edelson, Senk
and Stock, 2018). They are not entitled to share their profits from other like partnership
and other form of business organisation.
 Confidentiality: The vital information of a business remains confidential within the sole
trader and there is less chances of violation of their privacy rights. He is the only owner
and can make their own decision for effective running of business.

 Control: Sole Trader has full control over their business and no other person can
interfere in their business activities.
Disadvantages of Sole Trader:
 Lack of resources: It is very challenging for the sole trader to manager their resources.
This form of business organisation is managed by the sole owner so he has to used their
own saving and borrowings to raise their capital of the business.
 Unlimited liability: The liability of the owner is unlimited due to which debt can be
paid off by using their personal asset to minimise the risk.
However, Sole trader can be choose as a form of business organisation as Samuel can enjoy the
single ownership and profit. He can enjoy full control over their business.
Partnership: It is formed by more than two person to run a business in UK. It is formed by
signing document called partnership agreement which is optional to made in written but can be
done to avoid future dispute and conflicts among the partnership. The partnership shares their
funds to raise the capital of partnership firm and shares the profit according to their contribution
in partnership firm.
Advantages of Partnership are :
 Easy Formation: The partnership firm is simple to from and involves less legal
compliances. It can be made in written and orally (Hardman and Rowell, 2021). It is
advisable to made the partnership agreement in writing to avoid dispute and conflicts in
future.
 Flexibility: It is very simple to manage and control the activities of partnership firm. This
kind of business organisation are simple and easy to alter at any stages of partnership
firm.
Disadvantages of Partnership Firm:
 Unlimited Liability: The liability of partnership firm is unlimited. Every partner is
jointly liable for the debts of firm. The partners are unlimited liable to pay off their debts
and personal asset can be used to pay the creditors.
 Conflicts: Partnership is generally formed ion the basis of trust and confidence. But
sometimes conflicts may be created due to differences in their views and thoughts cause
dispute among them.

However, the Partnership form of business organisation burdens the partners to repay the debts
and profits are shared among them. There is less chances to grow and expand the business.
Limited Company Business structure
Where a company is registered and incorporated as per company norms the said company attain
the status of private limited company, directors are appointed in a company who are assigned to
take essential decisions and manage the entire organisation. A company is a separate entity
which makes a company and its directors separate from each other and established their
respective liability. A limited company can be sued on its own name.
Advantages of Limited company
 Limited Liability: the availability of limited company is limited. It means the personal
asset of the owners are not used to repay the debts of the company. The shareholders are
the actual owner of the company.
 Separate legal entity: It is one of main feature of limited company as it is separate legal
body and always distinct from its owners. It enjoys special rights according to Company
Act of 2006.
Disadvantages of Limited company
 Legal Formalities: The limited liability company is incorporated according to the
Company Act of 2006 which defines proper way to register the company. It involves
more paperwork and legal procedure to run LLC.
 Accountant Cost: LLC requires higher professional experts of accounting and CA to
conduct audit and accounting meetings. These professional are charging very high fees
to conduct such meetings.
Therefore, the Limited liability company can be used if Samuel have enough funds and resources
to expand their business. It requires lot of investment to manage the activities of LLC.
Limited Liability Partnership
The structure of LLP is akin to partnership firm, the only difference is it has limited liability in
the firm. The name of company is determined by the word limited in which the respective
partners does trade under the name of a limited firm (Hay, 2018). There is a limited liability
established in the limited company and the partners are made liable up to their contribution in a
firm. The partners are not collectively responsible for their any one partners misconduct. Annual

report is being prepared by two appointed members for accounts and financial assessment. To
form a limited liability partnership minimum two members are required out of which one is a
company which is an artificial company.
Advantages of LLP
 Lower registration Cost: The registration cost of LLP is comparatively low than the
other types of company. The simplicity and easiest procedural system attracts the owner
to choose the most convenient way to incorporate LLP kind of business organisation.
 Limited Liability: The liability of partners are limited and their personal asset and
borrowings will not used to pay off the debts of business organisation.
 Sharing of Profits: All the partners share profits of business in the same ratio of their
contribution,made to join LLP.
Disadvantaged of LLP
 Public Disclosure: It is the biggest disadvantage of LLP because the document of
incorporation is submitted to authorities is a public document.
 Consent of Partners: It is very challenging to achieve the consent of all the partners in
order to transfer the ownership rights.
Therefore, it is the most suitable option because the liability of each partners is limited and they
are not stressed with repayment of debts of the creditors (Keeble, 2018). The resources can be
managed easily by this forms of business organisation.
Recommendations for IOM Solutions
From the above report it is recommended to the IOS Solutions in order to expand its current sole
trade business to limited liability partnership. This approach will help IOM solutions to explore
the market and create huge revenue. The liability will also limited to the extent of capital and not
liable for partners misconduct. Limited liability partnership will surely help IOM to meet its
target positively. The limited liability partnership is beneficial as it reduces the burden of
repayment of debts. The limited liability involves less legal formalities and simple to operate
such kind of business organisation.
CONCLUSION
From the above extract, it is evident to conclude that there are various aspects and facets
associated with business which are covered and regulated by business law. Business law

provides various business structure to form and options to adopt any structure with the view to
expand the business. The report has at last recommended to the IOM Solutions to go ahead with
the option of limited liability partnership to expand its business. The UK legal system is very
complex and diversified due to which protection is available to every kind of business
organisation to ensure economic growth of the country. Each type of business organisation is
unique in itself. The nature and size of business organisation helps the owner to invest money
and diversify their business.

REFERENCES
Books and Journals
Bruner, C.M., 2018. Opting out of fiduciary duties and liabilities in US and UK business entities.
In Research Handbook on Fiduciary Law. Edward Elgar Publishing.
Corsi, S., Feranita, F. and De Massis, A., 2022. International R&D partnerships: the role of
government funding in reducing transaction costs and opportunistic behavior. R&D
Management, 52(3), pp.530-547.
Edelson, S.A., Senk, C.C. and Stock, K.L., 2018. Using an integrated business experience to take
the place of “introduction to management” in an integrated curriculum. Journal of
Education for Business, 93(7), pp.332-340.
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.
Hay, J.R., 2018. Employers’ Attitudes to Social Policy and the Concept of ‘Social Control’,
1900–1920. In The Origins of British Social Policy (pp. 107-125). Routledge.
Keeble, D., 2018. High-technology industry and local environments in the United Kingdom.
In High Technology Industry and Innovative Environments (pp. 65-98). Routledge.
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.
Tantra, R., 2019. Self-Employment. In A Survival Guide for Research Scientists (pp. 215-224).
Springer, Cham.
Varshney, M., 2021. Has the Limited Liability Partnership Model Provided an Effective
Alternative to the Complexity of Incorporation and the Personal Risks Associated with
Partnership Law. Issue 4 Int'l JL Mgmt. & Human., 4, p.657.