Business Law: Reorganization Strategies and Legal Consequences for IOM

This report examines the various business structures available for IOM Solutions Limited to reorganize its operations, given the increasing pressure on its owner, Sam, due to business growth. It explores options such as sole proprietorship, partnership (general and limited), limited liability partnerships, and corporations, detailing the legal consequences associated with each. The report further analyzes the legal implications of each business entity type, including unincorporated and incorporated businesses, sole traders, partnerships, and public vs. private organizations, highlighting the legal responsibilities and formalities involved. Ultimately, the report recommends a partnership structure for IOM Electronics, emphasizing risk sharing and compliance with legal regulations, which can facilitate effective and efficient operations and sustainable growth. Desklib provides students access to a wealth of resources including past papers and solved assignments.

Business Law
Contents

INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
Explanation of various types of organizations available for the reorganization of the business that is
IOM solutions limited..............................................................................................................................3
Legal consequences of each business entity............................................................................................5
Recommendation for IOM electronics for selecting appropriate business...............................................7
CONCLUSION...........................................................................................................................................7
INTRODUCTION

Business law is the governing body which has laid down the rules in order to regulate the
reciprocation of the commercial dealings between the individuals. It is also known as Mercantile
Law or Commercial Law. It covers all the statutes that talks about how to run a particular
business and its incorporation. It encompasses various regulations that is obligatory on the part
of every business corporation to follow them. It also covers the licensing policy and rules which
is needed when a business unit wants to expand or run its business in other state. It also supervise
the buying and selling of manufacturing goods, corporate agreements and other business
operations. This report will evaluate the study of IOM solutions limited that is supplying
different electrical parts to the garages. Sam is the owner of IOM ltd. who is indulged in this
business from eight years. Sam is unable to run the business under pressure as the business was
developing from last two years. Further, this report will explain the different types of
organizations available to reorganize IOM solutions. It also contains the legal consequences for
each organization. And it also includes the suggestions to identify the best suitable type of
organization for Sam.
MAIN BODY
Explanation of various types of organizations available for the reorganization of the
business that is IOM solutions limited.
The business organization of Sam that is IOM solutions limited is experiencing growth in
the market from past two years which is creating more pressure upon Sam, who is a sole trader.
Now it is not possible to handle the demands of the customers on the large scale. The business
also needs an expansion so as to ensure the future development and growth of the company.
There is a huge competition in the outside world related to business. And it is very much
required that the particular business unit must broaden its horizons in order to meet the desires of
the customers. A company has different options which can help in the administering the
operations of a company with its diversification. It is very crucial for a business organization or a
company to choose the appropriate business type(Nyoni, and Hart, 2018). All the companies
holding their business in national or international market must focus on selecting the suitable

type of business. In the case of Sam, it will surely assist in multiplication of the profits by
reducing the pressure of managing work and including more people in the company to meet the
demand in the market. The options that are available to Sam are discussed below-
Sole Trader- This type of business includes a single owner for meeting the various requirements
of the business and to run the business. Only the owner has the right to take the decisions for
different purpose. There is no involvement of any other party. The business is solely depends
upon the existence of the owner, for example, if the owner wish to wind up the business or dies
then in that case, the business will also come to an end(Repiquet, 2018). There no legal identity
of the business without the owner, means the owner must be associated with the business. This
form of business can be adopted when an individual do not want to invest much amount to start
the business and wants to set up a small scale enterprise. Sole trading involves less cost. Sam has
already operating the business as a sole trader. There is no regularizing body in this type of
business. The owner enjoys full control over the company. There is no need to share the profits
in sole trading(Masoodeen, and Mazahir, 2019).
Partnership- This type of business includes a formal agreement between two or more
individuals in order to carry out the business(Harris 2020). There are two or more parties are
involved. They share the losses as well as the profits equally. They are accountable for each and
every business operation. The authorities, liabilities and the rights are clearly mentioned in the
partnership agreement. They work according to that agreement. There are two types of
partnerships, one is termed as general partnership and other is the limited partnership. In case of
the general partnership the partners are required to fulfill all the duties on their part and they
holds equal share in the profits and losses of the firm. Whereas, in limited partnership, the
partners are not liable for any losses because they are the investors of that firm. They only share
the profits and not losses, even they are not liable for any debts of the firm. Sam can go with this
type of business in order to share the responsibility which can release the burden to an extent.
Limited liability- As the name suggests itself, in this type of business the partners share limited
liability in terms of losses and debts. They also share the profits without double taxation, which
means that when two or more persons form a partnership, they are required to pay the taxes on
the name of the corporation as well as on the name of the partnership they hold. Sam can opt for
this type of business in order to include more people to form limited liability partnership. This

will limit their liabilities. It would be helpful in the expansion of the business(Giupponi, and Xu,
2020). It will also allow the partners to separate their identities from the business they run. They
will not be responsible for the acts of the other partners.
Corporation- A corporation posses a separate legal identity from its owners. It holds rights and
liabilities similar to the individuals who are involved in its functioning. The stakeholders of such
business type do not share any kind of liability and are not accountable for the corporation’s
debts. A corporation can be formed by a single person or by a group of individuals(Brown,
Liñares-Zegarra, and Wilson, 2018). The main objective of operating such business is not always
earning profits. In the case of corporation, transferring of the business to another person is easy.
And the personal assets of the individuals are not used for the repauyment of any kind of loan or
debts. Sam can choose this form of business in order to achieve the desired aims of the company,
IOM solutions.
Legal consequences of each business entity
The law and its legal dimensions of different type of business organizations are structure
of legal business and its consequences. This is one of the crucial role of management of a
company to resolve most of the legal outcome of commencing a business entity. In United
Kingdom there is two kind of business entity which is been incorporated and unincorporated.
The companies which is been unincorporated are business which is least interfered by
government. These unincorporated business companies contains main organizations which has
been made without any legal gesture. This is a major accountability of an unincorporated
business which follows the rules and regulations which is been developed by the government to
lead the market places. The general sole proprietor and partnership are the main organization
which comes under this category. The major role of a business is to take into consideration the
ways of improve crucial approach and this is beneficial to form a legal structure. This
unincorporated business have some legal formalities and much easier formation(Sadiq, 2021).
This also covers public and private organizations. The share of private limited organizations is
not given to the public. The interference of government is minimum and very less in manner to
develop effective edge of a private organization. Different type of directors manage these
organizations and there key source to arrange funds are debentures. In the recent scenario there

are many individuals who all are focusing on development of private business which performs
legal operations.
Public organization- The company which put public limited away of its name are called public
company. The public organizations were being formed and the share is being sold to the public.
The government in United Kingdom runs many public limited companies in full swing. When
the public limited company is been formed, the requirement of two director is there or more, with
the secretariat of company(Sharma, 2020). The document which are required in formation of a
public organization includes digital signature of owner, memorandum of association and article
of associations. The fund to form a public company is provided through public taxes, institutions
of government and many more. These are the key organization which increase employment,
national income and gross domestic product.
Sole trader- This meant as a business which is been started and managed through a single
person. There is less legal formalities for the business and less involvement of the government.
As there is sole trader so all the legal responsibility of progress in business is in the hand of on
person(Cribb, Miller, and Pope, 2019) . To use the INHRC number to register the business this
is the major role of sole trader. The funds are to be arranged by relatives like family members
and friends, in this type of business. To develop legal structure and the approach in a business
organization is one of the major in a business. Most of the companies in the market focus on
flexible legal structure to make all major operation in a legal matter. One of the major key role of
a business is to maintain the approach which is good for increasing participation of employee.
This type of business were consider as major type of business which helps in maximizing the
strength of the economy too (Billis, and Rochester, 2020)
.
Partnership- The formation of a legal partnership involves formalities as partnership agreement
between two or more people. The organization of business in the marketplace in partnership will
develop a legal structure which is much easier to understand(Rahman, and Ghadas, 2018). To
develop a company the legal structure is most important and play a vital role for business welfare
and development. The legal claims which is been made by the partners includes the major
formalities of legal which associated with major business development.

Recommendation for IOM electronics for selecting appropriate business
The IOM electronics are recommended to choose partnership which improves major way
of doing business. The suggestion for IOM electronics to choose the IOM partnership as this is
one of best way for doing business. In this partnership there is an approach for risk sharing which
will help to eliminate the risk associated with operations. Many of the successful national and
international organizations in this market focus to do business as according partnership deed to
maintain sharing of risk and loss. To develop key functions effectively and efficiently the IOM
electronics should perform the operations based on partnership (Berry, 2021). The IOM
electronics have to consider this partnership as the manner of doing business which complies
with legal rules and regulations. This process follows one of the major role for business to make
risk free developments through minimum risk taking techniques. The major different companies
in this market have to focus on developing their capabilities and strengths with the support of
legal and ethical approach.
CONCLUSION
The above report concludes that business laws covers certain rules and regulartions
including rights and duties of the individuals engaged in any of the business activities. Every
business organization or company must follow the laws for the smopoth functioning of their
respective business units. In order to avoid any legal interference the business entities are
required to incorporate the business operations accordingly. Further, the report explains the
various types of business forms which can be adopted by any individual who wants to organize
or re- organize its business. They can be named as, sole trader, corporation, partnership and
limited liability. All these forms contains both positive and negative aspects and also some legal
obligations and consequences.
REFERENCES

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