Analysis of UK Employment Law and Dispute Resolution Mechanisms
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Desklib provides past papers and solved assignments for students. This report offers advice and guidance on employment law and dispute solutions.

ADVICE AND GUIDANCE ON EMPLOYMENT LAW
AND DISPUTE SOLUTIONS
AND DISPUTE SOLUTIONS
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Table of Contents
Introduction:....................................................................................................................................2
Explain the nature of the legal system:............................................................................................2
P1: Different sources of law:......................................................................................................2
P2: Role of Government in law making and application in justice making:...............................3
M1: Evaluation of legal terms in recent reforms and developments:..........................................4
Illustrate the potential impact of the law on the business................................................................4
P3: Illustration of company’s employment and contract law:.....................................................4
M2: Differentiation between legislation, regulations and standards:..........................................5
Examine the formation of different types of business organization................................................7
P4: different types of legally formed business:............................................................................7
P5: Management and funding of business organizations:............................................................8
M3: Advantages and disadvantages of different types of business organization:.....................10
Recommend appropriate legal solution to resolve area of dispute................................................11
P6: legal solution to resolve the dispute:...................................................................................11
M4: compare and contrast different sources of legal advice and support:.................................12
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13
Page 1 of 16
Introduction:....................................................................................................................................2
Explain the nature of the legal system:............................................................................................2
P1: Different sources of law:......................................................................................................2
P2: Role of Government in law making and application in justice making:...............................3
M1: Evaluation of legal terms in recent reforms and developments:..........................................4
Illustrate the potential impact of the law on the business................................................................4
P3: Illustration of company’s employment and contract law:.....................................................4
M2: Differentiation between legislation, regulations and standards:..........................................5
Examine the formation of different types of business organization................................................7
P4: different types of legally formed business:............................................................................7
P5: Management and funding of business organizations:............................................................8
M3: Advantages and disadvantages of different types of business organization:.....................10
Recommend appropriate legal solution to resolve area of dispute................................................11
P6: legal solution to resolve the dispute:...................................................................................11
M4: compare and contrast different sources of legal advice and support:.................................12
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13
Page 1 of 16

Introduction:
Different sources of law elaborate the role of government in law- making and it helps to
understand the impact of business in UK. A senior employee and dispute law advisor has been
appointed in London based law firm Global Solicitors to take the charge of all dispute and
employment related cases. This handbook offers the advices and guidance on employment law
and different dispute solutions. This report describes multiple sources of UK. This study also
elaborates the role of government in making laws. Moreover, this report also evaluates the
effectiveness of the legal system for the development of business. Employment and contract law
provides the impact on business by identifying the differences between regulations and
legislations. Furthermore, this study also explores the pros and cons of different types of business
organizations. This study also proposes appropriate legal solutions to resolve the legal disputes to
obtain legal advice in the business organization.
Explain the nature of the legal system:
P1: Different sources of law:
Firstly a brief classification should be made between the types of laws. It depends on the nature
of the objective the law and nature of the person who is exercising the law. Private law, on the
contrary is more concerned with how private organizations exercise laws on their clients. If an
assassin is held captive, criminal law will probate him. Land laws and other civil laws, inspects
areas of marital disputes, employment problems and others (Hamilton and Webster, 2018).
The sources or origins if to be mentioned, Central National Legislature should be named, the
main derivative of law enforcement in UK. To mention the international sources, European
Community Law and International Conventions and treaties must be named. National sources
such as Legislation, Case Law and other parliamentary conventions should be mentioned.
Civil Law enforcement
In London, the High Court takes on most of the cases. A person, who files the case, is known as
the claimant. On completion of a case successfully, the court may direct the wrongdoer to behave
in a certain conduct or may prohibit him to adhere to unfair practices. A claimant may fill up a
Page 2 of 16
Different sources of law elaborate the role of government in law- making and it helps to
understand the impact of business in UK. A senior employee and dispute law advisor has been
appointed in London based law firm Global Solicitors to take the charge of all dispute and
employment related cases. This handbook offers the advices and guidance on employment law
and different dispute solutions. This report describes multiple sources of UK. This study also
elaborates the role of government in making laws. Moreover, this report also evaluates the
effectiveness of the legal system for the development of business. Employment and contract law
provides the impact on business by identifying the differences between regulations and
legislations. Furthermore, this study also explores the pros and cons of different types of business
organizations. This study also proposes appropriate legal solutions to resolve the legal disputes to
obtain legal advice in the business organization.
Explain the nature of the legal system:
P1: Different sources of law:
Firstly a brief classification should be made between the types of laws. It depends on the nature
of the objective the law and nature of the person who is exercising the law. Private law, on the
contrary is more concerned with how private organizations exercise laws on their clients. If an
assassin is held captive, criminal law will probate him. Land laws and other civil laws, inspects
areas of marital disputes, employment problems and others (Hamilton and Webster, 2018).
The sources or origins if to be mentioned, Central National Legislature should be named, the
main derivative of law enforcement in UK. To mention the international sources, European
Community Law and International Conventions and treaties must be named. National sources
such as Legislation, Case Law and other parliamentary conventions should be mentioned.
Civil Law enforcement
In London, the High Court takes on most of the cases. A person, who files the case, is known as
the claimant. On completion of a case successfully, the court may direct the wrongdoer to behave
in a certain conduct or may prohibit him to adhere to unfair practices. A claimant may fill up a
Page 2 of 16
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claim form and submit at the court. Cases usually involving land injunctions are addressed under
civil laws (Edge, 2017).
Criminal Law enforcement
The criminal cases are usually brought by the Crown Prosecution Service on behalf of the state.
Clearly, criminal cases are stricter and usually are concerned with maintenance of law and order.
Various lower courts are relegated the task of addressing different criminal offences. For
example, Magistrates court hears cases regarding theft, over-speeding; attended usually by a
qualified lawyer. However very serious offences as genocide, or homicidal acts, rapes are given
hearing dates in Crown Court. 12 jury members and some locals decide the degree of the offence
and on their basis the judge imposes trial sentences.
Other Laws
Constitutional laws resolves governmental and other issues related to constitutional reforms.
Administrative laws operates for State ministers while the Common law operates for the general
public
P2: Role of Government in law making and application in justice making:
Laws are made after passing bills through various Houses. Bills are early drafts, which are
criticized, scrutinized and voted. Finally it is amended, given a final reading and passed on to
consideration for the Royal Assent. This is the final approval by both the houses, which later
come to be known as “Act of Parliament”. Laws are created and passed to protect human and
state rights. Dealing with anti-socials, mafias and soliciting legal matters throughout the state are
the main reason behind effecting laws. Many people are constantly put under the pressure of
constant threats, harassment, domestic violence and it shall be deemed to have been considered
the failure of laws to probate people from committing heinous acts and atrocious crimes. The law
mechanism should be designed to safeguard people’s interest and develop a sense of trust on the
judicial systems (Shapiroand Stefkovich, 2016). If a law regarding blaring loudspeakers in public
or cutting back on too much emission of noises is passed, it will be both beneficial for the public
as well as for the government. But some laws may prove to be a failure, like which usually deal
with organized crime and mass execution or drug-trafficking. School laws regarding protection
Page 3 of 16
civil laws (Edge, 2017).
Criminal Law enforcement
The criminal cases are usually brought by the Crown Prosecution Service on behalf of the state.
Clearly, criminal cases are stricter and usually are concerned with maintenance of law and order.
Various lower courts are relegated the task of addressing different criminal offences. For
example, Magistrates court hears cases regarding theft, over-speeding; attended usually by a
qualified lawyer. However very serious offences as genocide, or homicidal acts, rapes are given
hearing dates in Crown Court. 12 jury members and some locals decide the degree of the offence
and on their basis the judge imposes trial sentences.
Other Laws
Constitutional laws resolves governmental and other issues related to constitutional reforms.
Administrative laws operates for State ministers while the Common law operates for the general
public
P2: Role of Government in law making and application in justice making:
Laws are made after passing bills through various Houses. Bills are early drafts, which are
criticized, scrutinized and voted. Finally it is amended, given a final reading and passed on to
consideration for the Royal Assent. This is the final approval by both the houses, which later
come to be known as “Act of Parliament”. Laws are created and passed to protect human and
state rights. Dealing with anti-socials, mafias and soliciting legal matters throughout the state are
the main reason behind effecting laws. Many people are constantly put under the pressure of
constant threats, harassment, domestic violence and it shall be deemed to have been considered
the failure of laws to probate people from committing heinous acts and atrocious crimes. The law
mechanism should be designed to safeguard people’s interest and develop a sense of trust on the
judicial systems (Shapiroand Stefkovich, 2016). If a law regarding blaring loudspeakers in public
or cutting back on too much emission of noises is passed, it will be both beneficial for the public
as well as for the government. But some laws may prove to be a failure, like which usually deal
with organized crime and mass execution or drug-trafficking. School laws regarding protection
Page 3 of 16
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of students, including protecting kids against ragging, bullying and related psychological
traumas.
On discussing over Statutory Law and Common Law, a clear distinction must be drawn. To
define Statutory Law, it is a legislative law created under the jurisdiction of court, violation of
which is punishable under law enforcement agencies (Nonetet al.2017). While Common Law
usually categorizes the cases falling under prior incidents of law violation like labour contraction
law or income tax law.
M1: Evaluation of legal terms in recent reforms and developments:
Illustrate the potential impact of the law on the business
P3: Illustration of company’s employment and contract law:
Employment law governs the relation between the management and the employee and it helps to
achieve the goal to protect the rights of employee (Kavanagh and McRae, 2017). These laws
work on the basis of discrimination, health and safety prevention, economic support
establishment, prevents the disruption of employer and employees. Employment law includes
Compensation of employees
Employees’ benefits
Security
Health and safety in organization
Relationship among employees and management
Discrimination of employees
Unethical termination
Casual and medical leave
Employment law protects the rights of the employees and covers all the factors of the
relationship among the employees and employers. The employees need to go through all the
rules and regulations to avoid employment monetary transactions (Teague and Donaghey,
2018). This law also covers different areas of employment including treatment, working
Page 4 of 16
traumas.
On discussing over Statutory Law and Common Law, a clear distinction must be drawn. To
define Statutory Law, it is a legislative law created under the jurisdiction of court, violation of
which is punishable under law enforcement agencies (Nonetet al.2017). While Common Law
usually categorizes the cases falling under prior incidents of law violation like labour contraction
law or income tax law.
M1: Evaluation of legal terms in recent reforms and developments:
Illustrate the potential impact of the law on the business
P3: Illustration of company’s employment and contract law:
Employment law governs the relation between the management and the employee and it helps to
achieve the goal to protect the rights of employee (Kavanagh and McRae, 2017). These laws
work on the basis of discrimination, health and safety prevention, economic support
establishment, prevents the disruption of employer and employees. Employment law includes
Compensation of employees
Employees’ benefits
Security
Health and safety in organization
Relationship among employees and management
Discrimination of employees
Unethical termination
Casual and medical leave
Employment law protects the rights of the employees and covers all the factors of the
relationship among the employees and employers. The employees need to go through all the
rules and regulations to avoid employment monetary transactions (Teague and Donaghey,
2018). This law also covers different areas of employment including treatment, working
Page 4 of 16

hours, absence, business transfers and the employment contracts. Employment law affects the
business in many cases including
Sex oriented discrimination
Race and disability related discrimination
Discipline
Equal payment and equal rights
Data protection
Bullying and harassment
Contract law:
It is the legal document that acts as the oral or written agreement with the exchange of service of
the employees. It secures the business from harmful events. A contract is the legal agreement
that has different terms and conditions for different parties to be tied up. It also provides the
framework within the business organization among two parties (Bonges and Lusk, 2016). It
consists of terms and conditions that can be agreed or negotiated between the parties. The parties
sign the contracts after they are fully aware of the terms and conditions of business. The contract
can be effective for any business as it protects the risks of the company and it also provide the
guidelines to complete the business successfully (Cartwright, 2016). Most of the firms’includes
service providers to organize and manage their contracts in the business. For each and every
transaction, the contract can provide the legal evidence. If any business achieves any illegal
issue, then they can file case against the company. To legally bind any contract, the agreement is
needed in the company. Moreover, the companies create a legal relationship and make the
payment to different parties to implement the contract to any business.
M1: Evaluation of legal terms in recent reforms and developments:
The concept of law reform is wide as it takes a lot of time as well as proper planning. The
extreme law reform can be taken to make the changes in the legal organization. The
arrangements of the courts and its procedures are changed due to the variety of the cases that are
brought for justice. The reforms in the law are subjected to the development of the society or
country. It is the duty of the Law Commission to constantly follow up the law of United
Kingdom and to recommend the changes wherever it is necessary. The law commission was set
Page 5 of 16
business in many cases including
Sex oriented discrimination
Race and disability related discrimination
Discipline
Equal payment and equal rights
Data protection
Bullying and harassment
Contract law:
It is the legal document that acts as the oral or written agreement with the exchange of service of
the employees. It secures the business from harmful events. A contract is the legal agreement
that has different terms and conditions for different parties to be tied up. It also provides the
framework within the business organization among two parties (Bonges and Lusk, 2016). It
consists of terms and conditions that can be agreed or negotiated between the parties. The parties
sign the contracts after they are fully aware of the terms and conditions of business. The contract
can be effective for any business as it protects the risks of the company and it also provide the
guidelines to complete the business successfully (Cartwright, 2016). Most of the firms’includes
service providers to organize and manage their contracts in the business. For each and every
transaction, the contract can provide the legal evidence. If any business achieves any illegal
issue, then they can file case against the company. To legally bind any contract, the agreement is
needed in the company. Moreover, the companies create a legal relationship and make the
payment to different parties to implement the contract to any business.
M1: Evaluation of legal terms in recent reforms and developments:
The concept of law reform is wide as it takes a lot of time as well as proper planning. The
extreme law reform can be taken to make the changes in the legal organization. The
arrangements of the courts and its procedures are changed due to the variety of the cases that are
brought for justice. The reforms in the law are subjected to the development of the society or
country. It is the duty of the Law Commission to constantly follow up the law of United
Kingdom and to recommend the changes wherever it is necessary. The law commission was set
Page 5 of 16
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up in the year 1965 aiming at making fair, cost effective and simple law after conducting various
research and consultations. This commission recommends about new reforms that are to be made
to the parliament. The parliaments take two thirds of the recommendations that are done by the
Law Commission. The Law Commission Act 2009 and the Protocol came into force from
January 2010. The aim behind the reform was to improve the ratio of the recommendations that
are being implemented (Hood and Dixon, 2015).
M2: Differentiation between legislation, regulations and standards:
Business legislation regulates the duties of people to carry the business to ensure fairness in the
business. It also protects people to deal the business. It also used in the business to treat the
employees fairly and without discrimination. It also protects creditors and investors of the
company. Moreover, it also ensures a place for the competitive business and regulates the
business between the suppliers of any business (Oasmaaet al. 2015). The legislation considers
competition in business, health and safety of employees, environment and the consumers’
relation with the business. The legislations includes
Equal pay:
All the employees will be paid equally for the equal work in the business. Moreover, the
employees need to be paid national minimum wages.
Discrimination:
The employees will not be discriminated based on the race, cast, age, sex, religions status etc. the
discrimination can be applied during
Recruitment
Promotions
Transfers
Training
Termination
Regulations are the policy of the government that can protect the employees’ rights’, protects the
environment and helps to make the company accountable in the business oriented society. The
laws can be implemented in the business organization to make the changes in the business.
Page 6 of 16
research and consultations. This commission recommends about new reforms that are to be made
to the parliament. The parliaments take two thirds of the recommendations that are done by the
Law Commission. The Law Commission Act 2009 and the Protocol came into force from
January 2010. The aim behind the reform was to improve the ratio of the recommendations that
are being implemented (Hood and Dixon, 2015).
M2: Differentiation between legislation, regulations and standards:
Business legislation regulates the duties of people to carry the business to ensure fairness in the
business. It also protects people to deal the business. It also used in the business to treat the
employees fairly and without discrimination. It also protects creditors and investors of the
company. Moreover, it also ensures a place for the competitive business and regulates the
business between the suppliers of any business (Oasmaaet al. 2015). The legislation considers
competition in business, health and safety of employees, environment and the consumers’
relation with the business. The legislations includes
Equal pay:
All the employees will be paid equally for the equal work in the business. Moreover, the
employees need to be paid national minimum wages.
Discrimination:
The employees will not be discriminated based on the race, cast, age, sex, religions status etc. the
discrimination can be applied during
Recruitment
Promotions
Transfers
Training
Termination
Regulations are the policy of the government that can protect the employees’ rights’, protects the
environment and helps to make the company accountable in the business oriented society. The
laws can be implemented in the business organization to make the changes in the business.
Page 6 of 16
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Taxation policy is the government policy that affects the business based on the monetary
transactions earned by the business. Government spending policy is the funding policy that can
affect the business in the organization (Deakin et al. 2017). Higher taxes can affect the business
by spending the money on the products of the organization that can reduce the spending of the
consumers. Some policies can affect the business includes
Rules to deal with the competition between the businesses
Strong protection for the consumers to protect them from illegal business practices
Standards:
Standard is the document that sets of requirements for the specific term, material, system or
services to describe the particular method by establishing the consensus. It provides businesses in
the different type of organization with the mutual understanding. This can be useful for the
communication, commerce and manufacturing. Standards make the business easy by ensuring
the compatibility of products and materials (Commons, 2017). It provides the benefit to business
and the consumers to reduce the cost improve the safety of the business and enhance the
performance.
Civil Right Act of 1964 is one type of regulation that prohibits the discrimination among the
employees based on the color, gender, race and sex. Fair labor Standards is also legislation that is
applied when the employees suffer from long working hours and equal payment.
Examine the formation of different types of business organization
P4: different types of legally formed business:
The different types of legally formed business are
Sole Proprietorship:
This is the simple form of the business. The owner will be solely responsible for the profit and
loss of the business. It is also the least expensive type of the business. The business can be done
under their own name. They donot have to follow any employment law because most of the time
they donot have any employees (Aithal, 2016). This business also does not have any protection
Page 7 of 16
transactions earned by the business. Government spending policy is the funding policy that can
affect the business in the organization (Deakin et al. 2017). Higher taxes can affect the business
by spending the money on the products of the organization that can reduce the spending of the
consumers. Some policies can affect the business includes
Rules to deal with the competition between the businesses
Strong protection for the consumers to protect them from illegal business practices
Standards:
Standard is the document that sets of requirements for the specific term, material, system or
services to describe the particular method by establishing the consensus. It provides businesses in
the different type of organization with the mutual understanding. This can be useful for the
communication, commerce and manufacturing. Standards make the business easy by ensuring
the compatibility of products and materials (Commons, 2017). It provides the benefit to business
and the consumers to reduce the cost improve the safety of the business and enhance the
performance.
Civil Right Act of 1964 is one type of regulation that prohibits the discrimination among the
employees based on the color, gender, race and sex. Fair labor Standards is also legislation that is
applied when the employees suffer from long working hours and equal payment.
Examine the formation of different types of business organization
P4: different types of legally formed business:
The different types of legally formed business are
Sole Proprietorship:
This is the simple form of the business. The owner will be solely responsible for the profit and
loss of the business. It is also the least expensive type of the business. The business can be done
under their own name. They donot have to follow any employment law because most of the time
they donot have any employees (Aithal, 2016). This business also does not have any protection
Page 7 of 16

from the law suits of the claims. Personal assets are used in this business to pay the debt of the
business. The business’s income and expenses filed with the owner’s income tax return.
General partnership:
This business is owned by or more partners. In general partnership, the profits and losses are
shared equally. The partners are not only the part of the profits and they have to be responsible
for the losses also. Partnership takes huge risk because the bad decisions of one partner can end
up with a huge amount of loss in the business. Trust and confidence development is must in the
partnership business. Partners always have the agreement about the sharing of the profits and
losses. Sometimes, one partner has to pay the unlimited debts and laws of other partners. The
profits of the business flow through the partnership and it will be reported on every partner’s
individual income tax return.
Limited liability partnership:
In this partnership, one partner has the main control over the business while the other people
contribute and receive the maximum debt (McCarthy2016). This partnership mostly depends on
the entity’s funding and the structure of the liability of the company.
Limited liability Company:
A limited liability company is the structure to allow the shareholders to limit their abilities to
share the tax and the benefits of the partnership in the business. In this business, the partners also
make the legal contract based on the shares of the profits and losses. The members of this legal
business, the members can be easily protected from the debts in the organization; they have to
carry out the business in legal and responsible manner. It is also responsible for the accounts of
the shareholders. The profits and losses under this type of business depend on the each member
of the company. They can decide their taxation policy either as a partnership or as a corporation.
This business can file the tax as the partnership tax return or corporation tax return.
Corporation:
It is the most formal and expensive legal type of business. The corporation provides the limited
liability protection to the owners of the business (Moore, 2016). C Corporation divides their
Page 8 of 16
business. The business’s income and expenses filed with the owner’s income tax return.
General partnership:
This business is owned by or more partners. In general partnership, the profits and losses are
shared equally. The partners are not only the part of the profits and they have to be responsible
for the losses also. Partnership takes huge risk because the bad decisions of one partner can end
up with a huge amount of loss in the business. Trust and confidence development is must in the
partnership business. Partners always have the agreement about the sharing of the profits and
losses. Sometimes, one partner has to pay the unlimited debts and laws of other partners. The
profits of the business flow through the partnership and it will be reported on every partner’s
individual income tax return.
Limited liability partnership:
In this partnership, one partner has the main control over the business while the other people
contribute and receive the maximum debt (McCarthy2016). This partnership mostly depends on
the entity’s funding and the structure of the liability of the company.
Limited liability Company:
A limited liability company is the structure to allow the shareholders to limit their abilities to
share the tax and the benefits of the partnership in the business. In this business, the partners also
make the legal contract based on the shares of the profits and losses. The members of this legal
business, the members can be easily protected from the debts in the organization; they have to
carry out the business in legal and responsible manner. It is also responsible for the accounts of
the shareholders. The profits and losses under this type of business depend on the each member
of the company. They can decide their taxation policy either as a partnership or as a corporation.
This business can file the tax as the partnership tax return or corporation tax return.
Corporation:
It is the most formal and expensive legal type of business. The corporation provides the limited
liability protection to the owners of the business (Moore, 2016). C Corporation divides their
Page 8 of 16
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earnings and losses at the corporate level but they have to pay the taxes based on their profits and
the shareholders have to pay their taxes on the corporate dealings. In the S corporation business
the profits and the losses flow to the owners.
P5: Management and funding of business organizations:
The business organization can be managed by the board of director the company. He has utmost
power to run the business. The management team also has the same power as the managing
directors. In some public companies, supervisory committee is present to monitor the work of the
shareholders and the employees in the organization (Kerznerand Kerzner 2017). The human
resource manager has the power to recruit the employees in any organization. Team leaders and
employee representatives also present to monitor the work of the other employees.
The two types of external sources of funding are:
Equity:
Bootstrapping:
The business funds the company. As the business grows, the profits will be further used for the
growth of the business.
Self-funding:
Many entrepreneurs themselves fund their business. They use their debts or savings or they can
sell their assets to generate the case for the business.
Cloud funding:
The ideas are sent to the investors and the multiple investors contribute funds to their ides.
Venture capital:
These firms provide the funding in early-stage to make the large investment in the company.
Crowd funding:
These funding allow the individuals with a business, idea or project to reach the investors
through the platforms.
Page 9 of 16
the shareholders have to pay their taxes on the corporate dealings. In the S corporation business
the profits and the losses flow to the owners.
P5: Management and funding of business organizations:
The business organization can be managed by the board of director the company. He has utmost
power to run the business. The management team also has the same power as the managing
directors. In some public companies, supervisory committee is present to monitor the work of the
shareholders and the employees in the organization (Kerznerand Kerzner 2017). The human
resource manager has the power to recruit the employees in any organization. Team leaders and
employee representatives also present to monitor the work of the other employees.
The two types of external sources of funding are:
Equity:
Bootstrapping:
The business funds the company. As the business grows, the profits will be further used for the
growth of the business.
Self-funding:
Many entrepreneurs themselves fund their business. They use their debts or savings or they can
sell their assets to generate the case for the business.
Cloud funding:
The ideas are sent to the investors and the multiple investors contribute funds to their ides.
Venture capital:
These firms provide the funding in early-stage to make the large investment in the company.
Crowd funding:
These funding allow the individuals with a business, idea or project to reach the investors
through the platforms.
Page 9 of 16
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Partners:
Strategic partners can also be the source of the funding. The partners can provide the benefits to
the business by gaining the resources that will be helpful to expand the business in the
organization.
Debt:
Business lenders:
Many organizations lend fund in their business. Most of the lenders secured the loans by the
assets with some high cost. The owner of the organization spoke to the lenders about the short
term lending. This would be termed as the financing where the entire process of financing
follows certain rules securing the repayment of the borrowed amount.
Loans:
The business organizations will take the loans for their start-up business. Sometimes, they lend
the money to expand their business. These loans also require a guarantor because if the company
fails to repay, the guarantor has to pay the debts.
Banks:
Banks also provide business loans. The banks provide loans that can be secured with the assets.
In that case, mortgage loan is the most common type of loan often imposed on the businesses to
secure the money to be lent to the business owners. In case the non-repayment, the asset would
be used to rescue the value of the lent amount.
M3: Advantages and disadvantages of different types of business organization:
Advantages of the sole proprietorship:
It is the simple but expensive form of business
The owner controls all the operations in the organization
Regulations are very less
The owner has the decision making ability
The owner directly gain all the profits
Page 10 of 16
Strategic partners can also be the source of the funding. The partners can provide the benefits to
the business by gaining the resources that will be helpful to expand the business in the
organization.
Debt:
Business lenders:
Many organizations lend fund in their business. Most of the lenders secured the loans by the
assets with some high cost. The owner of the organization spoke to the lenders about the short
term lending. This would be termed as the financing where the entire process of financing
follows certain rules securing the repayment of the borrowed amount.
Loans:
The business organizations will take the loans for their start-up business. Sometimes, they lend
the money to expand their business. These loans also require a guarantor because if the company
fails to repay, the guarantor has to pay the debts.
Banks:
Banks also provide business loans. The banks provide loans that can be secured with the assets.
In that case, mortgage loan is the most common type of loan often imposed on the businesses to
secure the money to be lent to the business owners. In case the non-repayment, the asset would
be used to rescue the value of the lent amount.
M3: Advantages and disadvantages of different types of business organization:
Advantages of the sole proprietorship:
It is the simple but expensive form of business
The owner controls all the operations in the organization
Regulations are very less
The owner has the decision making ability
The owner directly gain all the profits
Page 10 of 16

Profit is declared as the personal tax return of the owner
No corporate income tax will be paid
Disadvantages:
The has to bear all the obligations of the business
Fund raising is difficult
Advantages of Partnership:
This type of business is very easy because the amount will be invested based on the
partnership agreement
As the numbers of investors are high, fund raising is very easy in this business
The income tax will be personal income tax
No corporate tax needs to be paid
Employees can be motivated and attracted to the business. (Akhmetshinet al. 2018).
Disadvantages:
Both the partners are responsible in this business
Partners have to take the decision together to resolve the disputes in the organization
Advantages of corporate business:
The fund can be raised through the sale of the stocks
Shareholders can transfer their ownership by selling the stock to others
The owner’s liability can provide the value in stock to hold in the business.
Disadvantages:
This business has many regulations as this business is monitored by some government
agencies
This is more costly than other legal form of business.
The profit can be taxed by the corporate tax where the shareholders have to pay the taxes
on the corporate dealings and they have to pay both the taxes including personal and
professional income taxes.
Page 11 of 16
No corporate income tax will be paid
Disadvantages:
The has to bear all the obligations of the business
Fund raising is difficult
Advantages of Partnership:
This type of business is very easy because the amount will be invested based on the
partnership agreement
As the numbers of investors are high, fund raising is very easy in this business
The income tax will be personal income tax
No corporate tax needs to be paid
Employees can be motivated and attracted to the business. (Akhmetshinet al. 2018).
Disadvantages:
Both the partners are responsible in this business
Partners have to take the decision together to resolve the disputes in the organization
Advantages of corporate business:
The fund can be raised through the sale of the stocks
Shareholders can transfer their ownership by selling the stock to others
The owner’s liability can provide the value in stock to hold in the business.
Disadvantages:
This business has many regulations as this business is monitored by some government
agencies
This is more costly than other legal form of business.
The profit can be taxed by the corporate tax where the shareholders have to pay the taxes
on the corporate dealings and they have to pay both the taxes including personal and
professional income taxes.
Page 11 of 16
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