IOM Solutions: Nature, Formation, and Management of Organizations

This report provides an overview of the nature, formation, and management of business organizations, with a specific focus on the United Kingdom. It begins by defining business law and its importance, then delves into different types of business organizations relevant to IOM Solutions, a sole trading concern. The report details the legal aspects of sole proprietorships, general partnerships, and limited liability companies, highlighting their advantages and disadvantages. It further examines the tax implications, liability issues, and formation processes associated with each structure. The report concludes with a recommendation that IOM Solutions convert to a Limited Liability Company to mitigate liability risks and avoid double taxation, ultimately improving workforce management and financial efficiency. Desklib offers additional resources for students studying business law and organizational structures.

Nature formation and management of
Business Organisations

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Business and organizations in United Kingdom..........................................................................3
Legal Business structure of United Kingdom companies............................................................4
Recommendation.........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Business law can be described as certain rules and regulations that are formulated by the
government of a country that guides the dealings that takes places between different individuals
or organizations. The business law is also known as commercial law and mercantile law. The
present report is based on study of IOM solutions (Okat, and Solak, 2020). The current report
aims to provide a brief introduction to the different types of organizations in which the IOM
solutions can get converted itself into the same. The present report will also discuss the legal
consequences associated with each form of organizational restructuring.
MAIN BODY
Business and organizations in United Kingdom
The IOM Solutions is a sole trading concern that operates within the boundaries of the
United Kingdom. A sole trading concern or sole proprietorship can be described as an
organization or business enterprise that is possessed, managed, operated and organised by a
single person. The owner of the business bears all the risks associated with the operations of the
organization and similarly, the profits generated with the help of the business is also used by the
owner itself. It is easy to develop a business in terms of sole proprietorship because there is less
governmental control and application of rules and regulation in association with the company as
compared to the different forms of organizational structures available with the company.
However, if a person or an individual want to enrol its business in the category of sole trading
concern, he or she has to go through a legal process (Kostruba, 2020). At first, the business has
to get itself registered for the purpose of self-assessment and then choose a specific name for the
concern that helps the business in providing itself with an identity of its own within the market.
Since, the sole trading concern is handled and managed by a single person of the organization,
the person itself has to keep the records of all the business transactions that takes place within the
company.
In a sole trading concern, it is the responsibility of the owner itself to file for the tax
returns in association with the sales and profits generated by the enterprise in each year.
Similarly, the responsibility of the owner in not restricted to the filing of tax returns of the
company but the owner has to pay its tax liabilities on time for each and every year (Veselovsky,
and et.al 2018). Also, it has been identified that if a sole trading company generates a sale of
about £85,000 or more in a 12-month period, the company or the enterprise is liable to get itself

registered for VAT. It has been determined that all the liabilities that are associated with the
business operations of the sole trading concern needs to be paid by its owner. This is because, in
a sole proprietorship, the owner of the company is personally liable for every and every debt that
has been taken by concern within the market.
Legal Business structure of United Kingdom companies
Sole trader
A sole trading firm or a concern can be defined as a business enterprise that is owned,
formed, managed, operated, controlled by a single individual. Since, a sole trading concern is
owned and managed by a single person, all the risks associated with the business operations of
the enterprise are bared by the owner. Similarly, all the profits that have been generated by the
business are enjoyed by the owner only. It has been identified that in order to form a sole trading
concern in the national boundaries of UK, it is essential for the owner to get in touch with the
HMRC and inform them that the owner of this firm is paying the required tax through the
process of Self Assessment and is maintaining the business recording efficiently within the
books of the firm. According to the provisions stated within the Business Law within the United
Kingdom, a sole trading concern has to pay income tax on the profits that have been generated
by the business enterprise and in accordance class 2 and class 4 National Insurance, the business
owner should make use of HMRC calculator that will help the sole proprietor in the preparation
of the budget.
Like any other form of business, the structure of a sole trading enterprise has its own set
of advantages and disadvantages (Castillo-Merino, and Rodríguez-Pérez, 2021). The advantages
of a sole trading concern include enjoying the profits made by the company solely, low cost of
setting the business, easy to manage and control the business. On the other hand, the
disadvantages of the sole trading concern include restrictions on the productivity and expansion
of the business. Also, it has been identified that taxes must be paid the owner itself and each and
every liability that the company has should be paid repaid by the owner.
General partnership
The general partnership can be described as a business organization that includes two or
more than two partners for the purpose of establishing a business within the company. According
to the Partnership act, 1980, when two or more individuals comes together in order to form a
business partnership with an objective to earn profit with the help of conducting the business

operations within the market. There are certain benefits and drawbacks of the general
partnership. The advantages of the general partnerships include easy to create. It has been
observed that forming a general partnership within the boundaries of United Kingdom is
comparatively easier than forming any other kind of company or organizational restructuring of
the business (Kuratko, Hornsby, and McKelvie, 2021). The general partnerships also allow the
individuals that have come together in order to form a partnership to flexibly change and alter the
rules and regulations as and when it is required for them. However, there are disadvantages of
the general partnership too. One of the major drawback of the general partnership is the lack of
structure with respect to the company. Similarly, another disadvantage associated with concept
of general partnership is that the general partnership can be dissolved easily. If there is not any
formal agreement between the partners, any of the partner can easily withdraw their names from
the general partnership formed between them.
It has been identified that a general partnership is not taxable in its own name. However,
the partners within the general partnership are taxable on the basis of the profits earned by them
according to their specified share (Myers, 2020). With respect to the provisions of liability, it has
been determined that the partners within a general partnership agreement with the laws of
unlimited liability which means that the partners will be held responsible for the liabilities that
have been taken in the name of the company.
Partnerships
A partnership can be defined as kind of business structure in which two or more
individuals comes together in order to form a partnership with an objective to generate income
using the business operations. In a partnership, the responsibilities associated with the business
are shared among the partners in the ratio of their partnership and similarly, the losses are also
divided within the agreed ratio. In a partnership, the individuals or the partners have to pay the
required taxes on their individual share of income that has been generated by them with the
formation of the partners. The tax rates are similar to the stated tax rates within the Income Tax
Act, 2007. There certain advantages and disadvantages of business partners. The benefits of the
partnership include that it includes lesser obligations with respect to the accounting (Gurkov, and
Filinov, 2022). It has been identified the format and the procedure of accounting and business
transactions that is followed by a business partnership is quiet simple as compared to other forms
of business structures. Until and unless the partners decide to bind themselves with a legal

partnership structure, the partnership can be dissolved easily. Similarly, another advantage of the
partnership is that when different individuals come together in order to carry out a business, the
organization gets the ideas, opinions and views if different people which helps them in
enhancing the business organization. On the other hand, the drawbacks of the business
partnership include unlimited liability. This means that the partners within the partnership are
jointly as well as severely liable for the debts of the partnerships. If a partner who has taken a
loan in the name of their partnership is unable to repay its debt, the other partners will be liable
to repay the debts.
Limited Liability
The limited liability refers to a form of business in which the owners of the business are
responsible for the losses incurred within the company only till the amount of capital that has
been invested by them within the business enterprise. The individuals who gets entered into a
limited liability company gets the advantage of avoiding the concept of double taxation. This can
be done because, it has been identified that the income earned by a limited liability company is
first considered as the income of its members whereas in other forms of corporations, the income
or the profit earned by a business is first taxed with the tax rate of corporations and then provided
to the shareholders in order to be taxed personally (Adim, and Poi, 2022). However, it has been
identified that it is difficult to raise capital in a limited liability company. This is so because, in a
Limited Liability company generally has only two options available with them in order to raise
funds, namely, debt and equity. Raising funds by way of equity means selling their ownership of
the business. This means that now one more member will be there in order to share the profits
made by the company. This reduces the individual profit share of the partners and therefore
makes it less profitable for them. This can be considered as a disadvantage of the limited liability
company. It has been determined that in order to close a limited Liability company within the
boundaries of United Kingdom, it is essential for the company to make all the shareholders as
well as the directors agree with respect to dissolving the company. Also, if an organization is
unable to repay its debt to the creditors, the government might force the company to
compulsorily close the company.
Recommendation
The IOM solutions should get themselves converted into the Limited Liability company.
It a structure of a company in which the partners or the owners of the company are not personally

responsible for the debts and liabilities of the company (Wright, and Siegel, 2021). Therefore, if
the IOM solutions to get themselves registered into the Limited Liability corporation. The
company will have limited liability and will also not have to pay double taxations like any other
form of company. It has been identified that other companies first have to pay a corporation tax
and then they are personally liable to pay the oncome tax on their personal income. However,
this is not the case in a Limited Liability corporation. This will help the IOM solutions in
resolving the issues they have been facing with respect to the managing the workforce within the
trading concern.
CONCLUSION
From the above report, it can be concluded that there are several forms of available
corporate structures with a particular company. However, each and every form of corporate
structure has its own set of benefits and drawbacks attached to it. The present report provides a
brief insight about the different forms of available organizational or corporate structures that can
be chosen by the IOM solutions for the purpose of getting themselves converted into the same.
The present report also discusses about the legal consequences associated with the each of the
mentioned corporate structures.

REFERENCES
Books and journals
Adim, C.V. and Poi, G., 2022. Dynamics of Corporate Entrepreneurial Initiatives: A Literature
Review. International Journal of Entrepreneurship. 6(1). pp.1-13.
Castillo-Merino, D. and Rodríguez-Pérez, G., 2021. The effects of legal origin and corporate
governance on financial firms’ sustainability performance. Sustainability. 13(15). p.8233.
Gurkov, I. and Filinov, N., 2022. Digitalization and corporate parenting styles of multinational
corporations. International Journal of Organizational Analysis.
Kostruba, A., 2020, February. Issue Of Legal Status Of Integrated Corporate Structures.
In Цивільне право України: нові виклики і перспективи розвитку (pp. 154-157).
Kuratko, D.F., Hornsby, J.S. and McKelvie, A., 2021. Entrepreneurial mindset in corporate
entrepreneurship: Forms, impediments, and actions for research. Journal of Small
Business Management. pp.1-23.
Myers, D.H., 2020. Corporate Implementation and Business Forms. In Sustainability in
Business (pp. 61-83). Palgrave Macmillan, Cham.
Okat, Ö. and Solak, B.B., 2020. Visuality in Corporate Communication. In New Media and
Visual Communication in Social Networks (pp. 37-59). IGI Global.
Veselovsky, M.Y., and et.al 2018. System approach to achieving new quality of corporate
governance in the context of innovation development. Quality-Access to
Success. 19(163).
Wright, M. and Siegel, D., 2021. Alternative investments, new organizational forms, and
corporate governance. Academy of Management Perspectives. 35(1). pp.1-8.
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