Analysis of Business Organisation Types for IOM Solutions

This report provides a comprehensive analysis of various business organization types, including sole proprietorships, partnerships, cooperatives, and limited liability companies (LLCs). It explores the advantages and disadvantages of each structure, emphasizing their legal implications and suitability for business expansion. The report uses a case study of IOM Solutions, a company selling electrical parts, to illustrate how different organizational forms can impact its growth and operational strategies. It examines the characteristics of each type, such as liability, management structure, and financial considerations, helping businesses make informed decisions when selecting the most appropriate structure for their needs. The report also discusses the process of forming each type of organization, including registration and legal requirements. It also explores the benefits of sharing the burden of expenses and losses, and the importance of considering factors such as liability and decision-making power. Ultimately, the report aims to guide business owners in choosing the optimal structure to achieve their goals and objectives.

Business organisation

Table of contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Types of business organisations are:....................................................................................5
CONCLUSION................................................................................................................................9
REFRENCES...................................................................................................................................9

INTRODUCTION
There are any types of business organisations and they are having different legal
consequences. It is important that correct type of business organisation should be
selected so people will not face any problem (Puente and Schneider, 2020). In the given
case, Sam has many options such as, partnership, cooperatives, limited liability
company. Types of business organisation is discussed in report.
MAIN BODY
Sam can opt for the partnership business for his IOM solutions. In this type of
business structure the company is owned and operated by two or more bodies. The loss
and the profit gained from the company are shared between the partners of the
company. The business partnership is legal relationship between two or more partners
of the company, the relation can be written agreement. The investment of money in the
company is done by each partner of the company and hence they can share the profit
made by the company and also the losses of the company. The partnership in the
company is registered with the state the organisation is operating. The agreement of the
partnership is made strong by deciding the allocation of the decision making power and
the resolve methods of the disputes (Miftahuddin, 2019). All the situations and what if’s
are answered in the agreement.
The payment to the partners is not given on a regular basis as they are the owners
and not the employees. The partners have provided with their part of profit and loss
each year. The payment is made in accordance with the agreement and the payment of
the partners is taxed individually. There are different types of partnership such as:
General partnership (GP) - the owners in this partnership have the liability for the
lawsuits as well as the debts. The partners are involved in the day to day operations of
the company.
Limited partnership (LP) – the owners in this partnership manage the business and
are liable for the decisions made by them. The partners who do not take the decision
are not liable for the liability.
Limited liability partnership (LLP) – the general partners and the partners are
extended with the legal protection with the liabilities in this partnership. This partnership

is formed when the partners are in the sane profession and this partnership protects the
partners from the other partner’s liability due to the actions.
Advantage so the partnership business is:

Less formal with the fewer legal obligations- the partnership business have a
lack of formality in comparison to the managing a limited company. The
process of accounting is simpler in partnership. The Corporation Tax Return
is not needed to be completed by the partnership business but they still have
to keep the records of the expenses as well as the income.

Easy to get started – the partner can start the partnership whenever they
want tot with the verbal or the written agreement. The self-assessment can
be registered online by each individual (Nyamwango, 2018). The partners
have no need to register with the Companies House. The registration for the
taxation is simple.

Sharing the burden- the partner can share the burden of the expenses to run
the company and the losses can be compensated by sharing as compared to
the operating of the business as a sole trader. The stress of managing and
starting the business can be shared.
Disadvantage of the business partnership:
 No independent legal status in business- there is no independent legal existence
distinct in the business partnership from the partners.
There are many types of organisations and all are having its advantages and
disadvantages. A person should select best form of organisation because there is
difference in legal consequences of all forms of business organisation (Cappellino,
2020). In the given case study, Sam is operating a business as sole trader i.e., IOM
Solutions, selling electrical parts to local garages. Sam is running this business alone
for eight years and he is handling all the issues. From the last two years, Sam has
found that business is growing as people are demanding for more products. Now it has
become hard for Sam to handle all the activities alone because pressure is increasing
and having opportunity to expand its business. After some time, Sam has decided to
expand its business so that more revenue can be generated and this will help in
creating positive impact on customers.

There are many options available to Sam for expanding its business such as,
partnership, cooperatives, limited liability company and corporations, joint stock
company. At present, Sam is doing business alone, handling all the activities,
investment is being done by his own earning and he has also suffered loss. Sam has
done struggle from a long time and facing all the challenges. Now, if Sam wants to
expand its business, then there are many options which Sam can choose. He should
determine advantages and disadvantages of all forms of organisation and also identify
legal consequences so that there will be no problem in future.
Types of business organisations are:
Sole owner
Sole owner refers to a single person who is handling all the activities and taking
risk alone so that he or she can generate revenue and run their business smoothly. It is
important to make proper plans or strategies so that a person can handle all issues and
face challenges. If proper planning is done then there will be no problem and work can
be done in a systematic way. In the sole partnership, an individual person is handling all
activities and responsible for earning revenue and bear loss alone. This is generally
used by small traders so that they can manage their work and they do not have to share
profit with anyone (Paschen and et.al., 2017). There are less legal formalities in this
form of organisation because it is easy to form and involve less members.
In the given case study, Sam is operating as a sole trader and selling electrical
parts to local garages. Sam is doing this business from last eight years and has
achieved its goals and objectives. Sam can recruit any person for help and continue its
business. If Sam soes not want to share profit with anyone then he can recruit
employees on salary basis and they will help Sam in completing targets. This will be
easy for Sam as fast delivery of products can be done and customers will also satisfy.
This is an option for Sam to expand its business that he can recruit some employees
who are having the ability to work efficiently and are capable enough to complete given
task on time. In this type of business organisation Sam has to give orders to its
members and provide them training or some tips so that they can perform better and
focus on achieving goals and objectives (Allen, Kraakman and Khanna, 2021).
Partnership

Sam can opt for the partnership business for his IOM solutions. In this type of
business structure, the company is owned and operated by two or more bodies. The
loss and the profit gained from the company are shared between the partners of the
company. The business partnership is legal relationship between two or more partners
of the company, the relation can be written agreement. The investment of money in the
company is done by each partner of the company and hence they can share the profit
made by the company and also the losses of the company. The partnership in the
company is registered with the state the organisation is operating. The agreement of the
partnership is made strong by deciding the allocation of the decision-making power and
the resolve methods of the disputes (Miftahuddin, 2019). All the situations and what are
answered in the agreement.
The payment to the partners is not given on a regular basis as they are the owners
and not the employees. The partners have provided with their part of profit and loss
each year. The payment is made in accordance with the agreement and the payment of
the partners is taxed individually. There are different types of partnership such as:
General partnership (GP) - the owners in this partnership have the liability for the
lawsuits as well as the debts. The partners are involved in the day-to-day operations of
the company.
Limited partnership (LP) – the owners in this partnership manage the business and
are liable for the decisions made by them. The partners who do not take the decision
are not liable for the liability.
Limited liability partnership (LLP) – the general partners and the partners are
extended with the legal protection with the liabilities in this partnership. This partnership
is formed when the partners are in the sane profession and this partnership protects the
partners from the other partner’s liability due to the actions.
Advantage so the partnership business is:

Less formal with the fewer legal obligations- the partnership business has a
lack of formality in comparison to the managing a limited company. The
process of accounting is simpler in partnership. The Corporation Tax Return
is not needed to be completed by the partnership business but they still have
to keep the records of the expenses as well as the income.


Easy to get started – the partner can start the partnership whenever they
want tot with the verbal or the written agreement. The self-assessment can
be registered online by each individual (Nyamwango, 2018). The partners
have no need to register with the Companies House. The registration for the
taxation is simple.

Sharing the burden- the partner can share the burden of the expenses to run
the company and the losses can be compensated by sharing as compared to
the operating of the business as a sole trader. The stress of managing and
starting the business can be shared.
Disadvantage of the business partnership:
 No independent legal status in business- there is no independent legal existence
distinct in the business partnership from the partners.
Cooperatives
Cooperatives are another form of business organisation which can be applied by
Sam for expanding its business so that more revenue can be generated and it will help
in achieving targets of IOM Solutions. A cooperative refers to an association of people
which is managed and controlled by persons to meet their common goals and
objectives. It is a voluntary form of company which is made by consent of people who
want to come together so that targets can be achieved. In this every member is having
right to speak and having voting right in selecting board of directors (Lyons, 2020). The
main aim of cooperatives is to bring people together and all should have equal rights
and opportunities, they should run their business smoothly.
In the given case study, Sam wants to expand its business so cooperatives can
be applied. For this Sam has to recruit more people who are having same goals and
objectives, then they should form an association, complete registration process and
then continue their business. Sam should find people who are running their business
from many years and having experience so that they all can come together and this will
help them in generating more revenue (Grashuis, 2018). For expanding business Sam
has to work hard and search for people who are selling electrical parts to local garages
or selling such type of products. So, this is another option for Sam to expand business
and take necessary steps for growth of IOM Solutions. But in this form of business

organisation, profit will be shared among all members and Sam has worked hard for so
many years. This is one disadvantage of cooperatives, so Sam should properly identify
that which type of business organisation is best for IOM Solutions and apply that to
accomplish goals and objectives.
Limited liability company
Limited liability company refer to an organisation in which company and
members are having separate legal entity. Members or shareholders of company are
not personally liable for debts. It has some advantages such as, tax benefit, flexibility of
income distribution, member control and simple (Bešlić-Obradović and Bešlić-Rupić,
2020). This can be applied by Sam to expand its business because in this form of
organisation Sam has to recruit more people and this will reduce pressure of Sam.
When many persons will be involved then it is easy to complete work and good quality
products will be deliver to customers. Sam can open a company in partnership with
friends or any relative who is doing business of electrical parts. This can be an option
for Sam and it will help in achieving goals and objectives, better plans will be made so
that more branch of IOM Solutions will be opened in other countries. Sam is being
working for eight years and now having too much experience to handle or manage all
the activities.
Joint stock company
Joint stock company refer to as an organisation in which shares of company can
be sold and purchased by shareholders. Some features of joint stock company are, it
has minimum number of members, all the employees are having limited liability, shares
are transferable, separate legal entity (Brozzi and et.al., 2020). In this form of business
organisation, members are having different legal entity from company and they are
responsible for limited liability for unpaid shares. It is important for Sam to take decision
after analysing advantages and disadvantages of all forms of organisation and choose
best option so that IOM Solutions can be expanded and more revenue can be
generated. Shares of joint stock company are easily transferable and there are no much
legal formalities. It is easy to form joint stock company and better plans can be made
which will be helpful in achieving goals and objectives.
Recommendation

In the given case study of Sam, it is mentioned that IOM Solutions is being
managed and controlled by Sam alone and running this business from last eight years,
selling electrical parts to local garages. According to my opinion, Sam should apply
partnership because it is the most suitable option. In this form of organisation there is
less investment and partners can mutually decide their sharing. A partnership deed
must be made by Sam so that in future there will be no conflicts and it will help in
smooth running of business. Partnership has many advantages such as, it has less
legal obligations, it is easy to form partnership firm. In this form burden is being shared
among partners and not a single person is responsible for handling all the issues and
partners will face challenges together. They will make plans or strategies after analysing
market situation and try to provide good quality products so that they can expand their
business in other countries. So, partnership is best option for Sam because it will help in
taking better decisions for growth of IOM Solutions and more partners, more capital and
less risk.
CONCLUSION
From the above discussion it can be concluded that, there are many forms of
business organisations such as, sole trader, partnership, cooperatives, joint stock
company and limited liability company. Sam, should select partnership to expand its
business because it is easy to form and less legal formalities are involved. Sam should
do business in partnership and make a deed in which all terms and conditions must be
mentioned, so that there will be no conflicts among partners in future.
REFRENCES
Books and Journals
Miftahuddin, 2019. The Importance of Characteristic Partnership as A Sustainable
Competitive Advantage: A Perspective Review. In
WESTECH 2018: Proceedings
of 1st Workshop on Environmental Science, Society, and Technology,
WESTECH 2018, December 8th, 2018, Medan, Indonesia (p. 235). European
Alliance for Innovation.
Nyamwango, 2018.
Strategic Partnership and Competitive Advantage: the Experience
of Commercial Bank of Africa (K) Ltd & Fintech Firms (Doctoral dissertation,
university of nairobi).
Allen, W. T., Kraakman, R. H. and Khanna, V., 2021.
Commentaries and cases on the
law of business organization. Lippincott Williams & Wilkins.

Bešlić-Obradović, D. and Bešlić-Rupić, I., 2020. Application of EVA concept in
business" SBB" limited liability company Belgrade.
Trendovi u poslovanju. 8(2).
pp.70-77.
Brozzi, R., and et.al., 2020. The advantages of industry 4.0 applications for
sustainability: results from a sample of manufacturing
companies.
Sustainability,
12(9), p.3647.
Cappellino, A., 2020. How to Choose the Right Business Organization Form.
Grashuis, J., 2018. An exploratory study of cooperative survival: Strategic adaptation to
external developments.
Sustainability. 10(3). p.652.
Lyons, M., 2020.
Third sector: The contribution of non-profit and cooperative enterprise
in Australia. Routledge.
Miftahuddin, 2019. The Importance of Characteristic Partnership as A Sustainable
Competitive Advantage: A Perspective Review. In
WESTECH 2018:
Proceedings of 1st Workshop on Environmental Science, Society, and
Technology, WESTECH 2018, December 8th, 2018, Medan, Indonesia (p. 235).
European Alliance for Innovation.
Nyamwango, 2018.
Strategic Partnership and Competitive Advantage: the Experience
of Commercial Bank of Africa (K) Ltd & Fintech Firms (Doctoral dissertation,
university of nairobi).
Paschen, J. A., and et.al., 2017. Enrolling advisers in governing privatised agricultural
extension in Australia: challenges and opportunities for the research,
development and extension system.
The Journal of Agricultural Education and
Extension. 23(3). pp.265-282.
Puente, I. and Schneider, B.R., 2020. Business and development: how organization,
ownership and networks matter.
Review of International Political
Economy. 27(6). pp.1354-1377.