Legal Structures and Financing for Sylvan Carpet Fashion

This report analyzes the structure of business growth, focusing on the case of Sylvan Carpet Fashion, a UK-based online retail startup. The report begins by defining business and exploring the goals of entrepreneurs. It then delves into various business structures (PLC, LTD, CIC, and registered charities), comparing their frameworks, objectives, commencement requirements, strengths, and weaknesses. The report emphasizes the importance of choosing the appropriate legal structure, particularly the LTD, and discusses its tax advantages, limited liability, and agility, while also acknowledging potential drawbacks such as accountancy costs. Furthermore, the report identifies three key sources of finance available to startups: angel investors, business loans, and funding from family and friends, evaluating the advantages and disadvantages of each. The report provides a comprehensive overview of the key considerations for entrepreneurs seeking to establish and finance a new business in the UK's online retail market.

Structure of Business
growth

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INTRODUCTION.
Business involves an activity which is commercial in nature where an individual engages in
continuous production or purchases and sells commodities with the goal of making a living and
accumulating wealth by meeting human needs. According to Murphy (2017), when starting a
new business, an entrepreneur has several goals in mind, such as increase customer base, uplift
the standard of society, creating various opportunities of job and so on. The structure of a
business determines who owns the entity, how profits are distributed, who is accountable to
whom, and so on. Sylvan Carpet Fashion, a feasible business start-up in the UK's online retail
market, was chosen to improve knowledge of business structure. The start-up company sells
mattresses as well as floor coverings. The company concept is a viable alternative for an
entrepreneur with limited money and the ability to meet client demand for adorning the floors of
homes, workplaces, and other buildings. The paper discusses several business sectors that
contribute to the economy, as well as diverse legal frameworks in context to start-ups. It also
emphasises the significance of HR policy in today's industry.
QUESTION ONE
Formulate a table which shows legal statuses along with different frameworks of business?
As per the point of view of Storey (2016), Business is an entrepreneurial notion in which
production as well as selling of items can tends to be done with the intention to earn maximise
level of profit. It is very importantl to identify different legal structure in order to comply with
regulations such as registration, licencing, and so on. The internet retail market in the United
Kingdom is one of the fastest expanding segments, providing exciting chances for exceptional
young entrepreneurs to start their own firm. Entrepreneurs are also aware of the opportunities
that have arisen as a result of rapid technology advancements.
Starting an internet retail business, such as Sylvan Carpet Fashion, is a wise business
move. Sylvan Carpet Fashion is a website that sells floor and bed coverings. Its goal is to provide
exceptional customer service and make it easier for customers to modify their spaces. Carpets for
vinyl flooring, wood flooring, and other types of flooring are among the company's offerings. It
also has a stock list of headboards, beds, and mattresses in a wide range of designs to suit clients'
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budgets and styles. The table below displays the several types of business frameworks or legal
statuses that Sylvan Carpet Fashion can use:
Frameworks of
businesses
PLC LTD CIC Registered
Charity
Meaning
PLC stands for
public limited
corporation, and
its shares are
traded on stock
exchanges. Its
liability is
tendsn to
be limited
(Roberts, 2018).
.
LTD stands for
Restricted
Liability
Company,
which means
that the
shareholders'
liability is
limited to the
amount of
money
deposited.
Limited
Liability
Corporations
(LTDs) are a
type of business
that has limited
liability.
CIC stands for
Community
Interest
Company, and it
exists to serve
society by
establishing social
aims despite
making a profit.
A registered
charity is a
business that
establishes and
tends to operates
some activities for
charitable reasons.
Objectives Businesses that
use the PLC
framework aim
to raise as much
capital as
The LTD
framework is
used by
enterprises with
the goal of
. The goal of a
CIC-structured
firm is to use
profit and
services to benefit
The goals of a
registered charity
organisation are
philanthropy and
social well-being
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possible through
shares.
producing
profits from
their operations.
the community
and to use them
for public goods.
(Graddy-Reed,
2018).
Commencemen
t of business
In order to start
a PLC, the
company must
first obtain a
Certificate of
Incorporation
and a Certificate
of
Commencement
of Business.
In an LTD, a
company just
needs to get a
Certificate of
Incorporation in
order to start
doing business
in the real world
(Winiewski and
Ligza, 2018).
Businesses that
want to use the
CIC structure
must first get a
certificate of
registration and a
certificate of
incorporation
before they can
start doing
business.
Business planning
to start a nonprofit
organisation
requires obtaining
a Certificate of
Charitable
Incorporation,
among other
things.
According to the table, Sylvan Carpet Fashion may form a limited liability corporation
(LLC). With the corporate structure in place, a new internet shop can attain professional status, a
separate legal identity, investment and lending opportunities, as well as maximise tax-free
advantages, generate massive income, secure the company name, and limit personal liability.
Furthermore, forming a limited company is a well-known approach to start a business in the
UK's retail sector Strengths and weaknesses that are required to consider while planning to
establish the business.
A new firm, like a newborn infant, requires extra attention and care during the early stages
of development. When starting a business in the UK's online retail sector, Sylvan Carpet
Fashion's founders must evaluate the following strengths and limitations of the LTD legal
structure:
LTD structure strength LTD Weakness
 Tax efficient: It is commonly known
that businesses who use the Limited
Company structure are more likely to
 Scarcity and choices: The structure of
limited company creates scarcity and
provides options for obtaining capital
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save money on taxes. The entrepreneur
must consider the strength while
developing Sylvan Carpet Fashion
because it will assist in producing
significant amounts of money that will
not be taxed in an accounting year.
 Limited liability: The LTD structure
protects entrepreneurs and small
business owners by limiting their
liability (Ward, 2016). Entrepreneurs of
Sylvan Carpet Fashion will be able to
protect their personal assets and
finances in the eyes of the law if they
have limited liability.
 Maximises tax free profits: The
strength of a limited liability business is
that it increases tax-free income by
having their loved ones as
shareholders . When deciding whether
or not to start a business, Sylvan Carpet
Fashion entrepreneurs must examine
their strengths.
 Agility: While new businesses are more
likely to respond to market conditions
and customer demands fast. Sylvan
Carpet Fashion's entrepreneurs may
make quick adjustments thanks to the
LTD business structure, as they are not
reliant on others for implementation
decisions. This adaptive stance also
makes innovations a valuable asset to
(Kemp, 2018). In the case of Sylvan
Carpet Fashion, the entrepreneur must
evaluate the structure's weaknesses
before deciding to open a firm in the
market, as this would affect business
decisions as well related practises.
 Accountancy costs: It is critical for a
start-up company that chooses the LTD
structure to retain an accountant to deal
with taxes. Accountants are responsible
for a variety of responsibilities,
including paying corporate tax, filing
organisational tax reports, and filing
VAT returns. It adds that Sylvan Carpet
Fashion's owner will be obliged to pay
a higher accounting cost, which might
be quite high.
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seizing development chances.
Before starting a firm, it is critical for a Sylvan Carpet Fashion entrepreneur to carefully analyse
the strengths and weaknesses of the legal structure.
Strength of plc Weakness of plc
 Raising capital with the help of public
issue :The main benefit of being a
public limited company is that with the
help of this organisation has power to
raise share capital, from outsiders if
company is tends to be listed on any
stock exchange. As it tends to give
permission to company to offer shares
to audience as well as to directors and
employees of company in exchange of
shares and buyback shares , the capital
that can be raised is typically much
larger than a private limited company.
On the other hand it also has a
possibility that having stock listed on
any of exchange could attract
investment with other institutional
traders, mutual fund and hedge fund.
 Short termism : Where a public limited
company is listed, there can be added
pressure imposed by the market. The
company’s share price represents the
value of the company as viewed by the
market, and (potential) investors will
usually expect a healthy return. As well
as dividends paid from profits, there
will be a desire for the share price to
increase.
This level of emphasis on the share price, usually not so immediate a demand in a private
company, can cause the directors to focus almost exclusively on short-term results. They may
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therefore miss strategic opportunities or threats, thereby not achieving the best for the business in
the long-term.
Strength of CIC Weakness of CIC
 easy to set up: As compare to charity it
can be says that the community interest
is developed in a quicker manner along
with consolidated applications are
required to present before Companies
House.
 Restrictions on dividend : As CICs
which is limited by shares are eligible
to distribute dividends, to their
shareholders and even then they are
subject to a dividend cap. standard
limits as per companies act provisions
that dividends can tends to be provide
upto certain level only. It is decided in
the regulation that only thirty five
percent of CIC’s profits in a single
year can be paid as dividends so for this
reserves are maintained in the company
. In which contribution is made every
year.
Also dividend cap leads to be aims to get a balance among dedicated advantages to the potential
individual as well as community and also it tends to be gain by stakeholders, in few situations
this might feel quite restrictive & also dissatisfy shareholders to make investment. Following
restriction will specifically combine if the social element is known as single part to business,
especially if there is more concentration is given to social purposes.
Strength of charity Weakness of charity
 Tends to provide tax benefits: In case if
company earn any type of income
related to stamp duty, capital gain, gifts
to charities are all tax free. In such
situations exemption are given.
 Trustees are not permit to attain
financial benefits from the charity on
which they have full control over the
affairs of the company and they are
responsible to make control unless
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mostly it is authorised by the governing
document
Identification of three sources of finance available for business start-ups
One of the most difficult aspects of starting a business is raising funds (Sources for business
finance, 2020). In the case of Sylvan Carpet Fashion, the entrepreneur can pursue the following
financing options or sources for the business concept:
Angel investors: These are high-net-worth individuals with strong business experience who
raise funds, particularly for start-up companies, against a percentage of their equity. Sylvan
Carpet Fashion may be able to receive funding from angel investors if the following qualities and
weaknesses of the source are taken into account:
STRENGTH WEAKNESS
Angel investors are extremely helpful to
talented entrepreneurs who are unable to
launch a business due to a lack of finances.
Sylvan Carpet Fashion entrepreneur can get
backing for his startup idea with these funding
options. Angel investors make speedy
investment decisions, don't charge interest on
repayments, and mentor in all aspects of
business
Angel investors contribute funding in
exchange for a percentage of the company's
stock, which can diminish Sylvan Carpet
Fashion's profit margins. In comparison to
other investors, it also provides fewer
structural supports.
Business loans: Banks and other financial organisations have devised programmes to
provide various business loans to new businesses (Shahriar, Schwarz and Newman, 2016).
8

Entrepreneurs can obtain financing from business loans in the instance of Sylvan Carpet Fashion.
The following are the advantages and disadvantages of business loans:
STRENGTH WEAKNESS
Business loans are versatile in that they
can be utilised for a wide range of purposes.
Business loans, in the context of Sylvan Carpet
Fashion, are lifesavers since they deliver
money in a predetermined proportion as
rapidly as feasible.
Business loans are long-term debts that
must be repaid by entrepreneurs over a long
period of time. If the owner of Sylvan Carpet
Fashion fails to repay the loan, the company's
guaranteed assets may be jeopardised.
Friends and family: To get the business off the ground quickly, a start-up company can
borrow money from family and friends (Burns, 2017). In the case of Sylvan Carpet Fashion, the
entrepreneur can seek financial assistance from relatives and friends. The following are the
funding source's advantages and disadvantages:
STRENGTH WEAKNESS
 The entrepreneur and their ideas are
well-known among friends and family.
The source's advantage for Sylvan
Carpet Fashion is that future interest
payments will be cheaper or non-
existent, making it easier to persuade
friends and family to give money.
 When the funding source is
incompatible with current
circumstances, it might strain
relationships among friends, family,
and Sylvan Carpet Fashion
entrepreneurs. It has the potential to
alter power dynamics (Bhimani, 2017).
 Before deciding to source required
finances, the entrepreneur of a business
start-up, such as Sylvan Carpet
Fashion, must analyse the strengths and
weaknesses of all accessible sources of
funds.
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QUESTION TWO
What are the three sectors in the country Unite Kingdom wherein business can tends to be
operate
Business sectors, according to Govindan and Al-Ansari (2019), are a subset of the domestic
economy that excludes government, non-profit organisations, and private families' activities .The
following are the three industries in which a company can be successful in the United Kingdom:
 Primary sector: As agriculture is most suitable example to this respective sector.
Forestry and fishing are example to such sector. But agriculture known as the largest
sector. Unemployment is the major issue of such sector. Also underemployment in
which workers are unable to work with best efforts or capabilities are another major
problem of following sector.
 Secondary sector: on the natural ingredients the economy depends as in this product &
services offered and in the end these are utilised for consumption purpose. In context to
value addition such sector is consider as the best . The main examples which cover under
these categories are manufacturing .In this around fourteen percent of the whole
workforce working in the domestic country.
 Tertiary sector: it is also known as service sector, is stands in third position in
economic sectors of the three-sector theory. The others are called as secondary sector,
and the primary sector. The service sector consists of the production of services rather
than end product.
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These industries make significant contributions to the UK economy. The following are the
distinctions between these business sectors:
Primary sector Secondary sector Tertiary sector
 Agriculture as well as
allied services are
called as primary sector
 Manufacturing sector is
famous part of
secondary sector.
 Its another name is
service sector.
 For primary sector raw
material as well as
services are offer
 Through developing
more secondary sector
make conversion of
product.
 Following sector offer
services to secondary
as well as primary
sector.
 In this traditional
techniques are tends to
be used and these are
not organised properly.
 In it more reliable and
suitable form of
manufacturing are used
as well as it organised
in systematic manner.
 It involves such
method which relates
to modern day logistic
so that functions of the
organisations are well
execute and organised
properly.
 In this sector various
activities related to
mining, agriculture and
forestry.
 Small scale units ,
manufacturing units,
multinationals as well
as large units are all
covered under it.
 Communication,
Banking and insurance
trade are comes in this
sector only.
Value of all the three sectors in United Kingdom Economy
Due to increase in the service sector the majority part of UK GDP is tends to be
generated particularly from this sector only. As in the year 2017 around two hundred and
fourteen billion British pounds were leads to be contributed in context to GDP from travel &
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