BMP4002 Business Law: Analyzing Legal Sources for Business in the UK

This report provides an analysis of the key sources of laws in the UK as they relate to business organizations, particularly in the context of IOM Solutions, a sole trading business looking to expand. It covers various types of business organizations including sole traders, general partnerships, limited liability partnerships, and limited liability companies, detailing their formation, taxation, liabilities, dissolution, advantages, and disadvantages. The report also discusses important legal aspects such as the National Minimum Wages Act 1998, the Equality Act 2010, and the Employee Rights Act 1996, along with vicarious liability and business liability in negligence. Furthermore, the responsibilities and duties of company directors are outlined, including their role in strategic decision-making and risk management. The report concludes with a recommendation for IOM Solutions to adopt a general partnership structure to facilitate growth and shared responsibility.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
Submitted by:
Name:
ID:
Contents
1

Introduction. 3
Businesses & Organisations in the UK 3
The legal business structure of UK companies. 6
Recommendations for IOM Solutions. 9
Conclusion. 10
References. 11
2

Introduction
In companies it is very important to manage their business operation ineffective
manner which could assist them in accomplishing their organizational (Van Dycke,
2021). IOM solutions is defined as a sole trading organization which is owned by
Sam. This respective company deals in electric parts of local garages. From the past
two years demand and supply of products have increased along with demand of
employees. Hence Sam is required to expand companies operation and is unaware
which type of organization he should establish. The following report defines different
type of business organizations along with recommendation to IOM solutions about
which type of legal business structure they should adopt.
Businesses & Organisations in the UK
Nature and management of a company-
It is important for organizations to manage their functions effectively and evaluate
which kind of business venture they are able to form in order to meet there
organizational objectives. It is also very crucial that the management of company is
goal oriented which simply means that their focus should be in accomplishing goal
first.
Different types of laws in UK related to business management
National minimum wages act, 1998: Under this law every organization in the
country must provide minimum wages to its workforce so that they could meet their
basic and financial expenses (Brinkmann and Kochupillai, 2020).
The Equality Act 2010: According to this law it is very important for companies to
treat their employees equal without any discrimination on the basis of gender, caste,
religion, colour and others.
Employee rights act, 1996: According to this law workers in company have some
basic rights which provide them opportunity file complaint against its employer if they
see their exploitation.
Business transactions management of a company-
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It contains organization of those transactions in a company which are associated
with monetary exchange or exchange in context to money. Some examples related
to business transaction are explain below:
• Taking money from banks.
• Cash trading of products.
• Buying raw material from when does on the basis of credit.
Vicarious liability- it is defined As circumstances where one party is partially
accountable for taking unlawful actions related to 3rd party. For instance,
discrimination is taking place in a company is accountable for unlawful activity
against its employees. Therefore they must punish culprits who are doing this
unlawful activity.
Business liability in negligence- It is described as a situation where an individual fails
to perform their accountability in an organization to accomplish organizational
objectives. Because of this negligence company have to face financial damage and
other loss (Baer, 2020). Therefore, in case of the UK, various companies appoint
those candidates who could assist them in accomplishing productivity and overcome
losses.
Directors role- Directors are responsible for taking important decision in a company
which could impact it’s growth and productivity in the market. Some of the
responsibility of directors are mentioned below:
• Determining the company’s strategic objectives and policies- Directors of an
organization are accountable to identify strategies which could assist
company in accomplishing organizational objectives and gain competitive
advantage over others in the market.
• Monitoring progress towards achieving the objectives and policies- They are
also accountable for organising meetings in order to discuss weather
employees are performing productively and accomplishing targeted goals. In
meetings they also appreciate those employees who are performing
effectively along with developing strategies to improve those candidates who
are showing slow growth.
• Appointing senior - They also play major role in recruiting senior management
staff of a company and delicate responsibilities according to their talent (Ekici
and Ekici, 2021).
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Liabilities of a director- Directors of an organization are also responsible for
covering losses made by the company because of wrong decision making or due to
their ignorance of ineffective performance by different departments.
Duties of directors- Some of the crucial duties which must be fulfilled by directors are
mentioned below:
• Duty to act within power- This is the most important responsibilities of a
director under which they are assign some highest power related to taking
decisions and making strategies for the growth of company (Howard, Wood
and Stonebraker, 2018).
• Duty to promote the success of the company- This is another main
responsibilities of a director where they have to promote success gained by
the company in the market and develop brand image.
Termination of Partnership- This is described as procedure under which
agreement between two or more partners get terminated because of various reasons
such as misunderstandings, conflict, passing of one partner and many others. All the
assets and liabilities of that company get disposed between the partners.
Memorandum of Association (MOA)- It is defined as a legal document which is
created when a company establish and registered. It simply defines relationship of
organization with its stakeholders along with describing purpose of establishing
company (AlAli, 2020). It would assist tech holders to evaluate their rights,
responsibilities and power within a company.
Articles of Association (AOA)- This is described as a legal document which define
several regulation of operations related to a company and aim coordination. It also
involves all those task of an organization and manner to distribute those
responsibilities among employees to accomplish organizational objectives. It also
consists of recruiting of directors and handling financial situation in an organization.
5

The legal business structure of UK companies
Sole Trader
Those individuals which handle all business issues alone and perform all business
activities by them self. It is one person organization. It is also called sole
proprietorship.
Formation- It is easy to form sole proprietorship business. Sole trader is required to
select a name for the business and the name should not taken by other business
names. The name of business should be different from existing business. After
selecting a name of business, sole trader is required to register the business with
local, state and federal government. They will provide all required permits and
licenses to the company. Hence, sole trader can start their business activities after
getting approval from their government.
Taxation- Tax of sole trader is required to pay in context of income of sole trader
which means the tax rate is calculated on the basis of income of sole
trader(Chiappinelli, 2018). In case the sole trader is earning more profit then they are
required to pay more tax and vice versa.
Liabilities- They are having unlimited liabilities which means they are required to
pay their losses even selling their personal property.
Dissolved- Sole trader is required to inform IRS, local and state tax authority before
closing their business. Sole trader is required to keep records of their tax payments
so that during dissolution they can use it as a proof that they are not required to pay
tax after dissolution. All permits and licenses get canceled in dissolution.
Advantages- The main advantage of sole trading business is that whole profit is
taken by owner and the control of power and decision making decision is in the hand
of owner.
Disadvantage- The main disadvantage is that the sole trader is having unlimited
liability and they have to bear losses alone.
General Partnership
Definition- General partnership is the form of business where two or more
individuals come together to work actively in business activities.
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Formation- General partner is required to choose a name of business which is not
taken before by any other business. Then they are required to create partnership
agreement where they mention roles and responsibilities of each partner which is
signed by all partners. Then they get securing employee identification number
(Coles, 2018). Then they need to have business bank account to manage business
transactions. Then they will get permits and licenses from government. At the end
they are required to maintain other regulatory and taxation policies and conduct their
business activities well.
Taxation-
 Partners earning £10,000 are not required to pay taxes.
 Partners have to pay 20 % tax in case they earn £31,865.
 Partners earning between £31,865 and £150,000 have to pay 40% tax.
 Those general partnership firms earning over £150,000 have to pay 45%
taxes.
Liability- They are also having unlimited liability.
Dissolved- few steps have to followed by general partnership firms for dissolution-
 Partners are required to review partnership agreement.
 Discussing the reason for dissolution with all active partners.
 Filing a dissolution form
 Notify others.
 Settle all the accounts before disclosing.
Advantage- Here, all partners take active participation in managing business.
Hence, no partner will have the burden to handle whole business alone.
Disadvantage- Conflicts may arise between partners due to different point of views
to manage business.
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Partnership
Definition- This is defined as kind of business where two or more than two
people form a joint venture in order to share benefits and responsibilities. There are
two types of partnership which includes General partnership and Partnership
(Munawir, 2020). In general partnership it is not vital for partners to remain active
whereas in general partnership they are accountable to show their presence.
Formation- The procedure of forming a partnership venture are described
below:
 Selecting a name for company.
 Developing a partnership agreement for all the partners that is mandatory to
be signed by them to avoid any further legal consequences.
 Securing workers identification number.
 Create a bank account for further transactions of the company.
 Keeping other taxation and regulatory policies.
 Securing permits and licenses from government authorities.
Liability- All the partners of the company possess unlimited liabilities.
Dissolved- To dissolve a partnership company it is very important to discuss
all the the situations before taking any decisions in order to come at single
agreement. The assets and liabilities of the company are shared by all the partners
on the same proportion.
Advantage- The main benefit that this firm provides to partners is that they
are not solely responsible for taking any decision which further decrease their
pressure.
Disadvantage- The main disadvantage that this firm provides is that while
making decisions conflicts could be create among partners.
Limited Liability
Definition- Limited Liability organisations are described as those firms where
owners possess limited liabilities which indicates that for covering any losses made
by company they can not utilize their personal properties (Tikotsky, Pe’er and
Feldman, 2020).
Formation- in order to form LLC following steps must be implemented:
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 Identifying whether it is right to select LLC for establishing business.
 Selecting a suitable name for organization.
 Determining superior authorities of the company.
 Taking decisions regarding stakeholders who will be responsible for business
operations.
 Creating documents for operating business smoothly.
 Lastly, registration must be done.
Taxation- These kinds of organisations are not accountable for direct taxation
by IRS.
Liability- Liabilities of LLC organisations are very limited that represent that
could cover their losses at very limited basis.
Dissolved- The company in the UK has to pay approximately £3000 to £7000
in order to disclose (Jebe, 2019). It is vital that overall creditors must be paid by the
organization before its disclosure.
Advantage- The main benefit that this kind of business provide is that the
owners have limited liabilities and are not required to overcome losses from their
own properties.
Disadvantage- The main disadvantage that LLC provides is that companies
are required to disclose their financial statements among public.
Recommendations for IOM Solutions
In case of Sam, it is recommended for them to adopt General Partnership as a
solution for IOM. General partnership would assist Sam to organise their business
functions effectively and their partners will also take participation in operating
operations based on their experience. It has also been observed that partnership will
assist them in sharing their investment and aid Sam to identify partners who possess
required knowledge about market.
9

Conclusion
It is concluded that there are various types of business like sole trader,
partnership and many other. A individual is required to identify which form they can
opt according to the aim and investment of business. Directors of business plays an
essential role in the growth of a company because they take effective decisions for
the company for future growth. Memorandum of Association will define the
company's objective and their stakeholders and the relationship which is gained by
company with their stakeholders.
10

References-
AlAli, M.S., 2020. The effect of who COVID-19 announcement on Asian Stock
Markets returns: an event study analysis. Journal of Economics and
Business, 3(3).
Baer, M.H., 2020. Law Enforcement's Lochner. Minn. L. Rev., 105, p.1667.
Brinkmann, J. and Kochupillai, M., 2020. Law, Business, and Legitimacy. Handbook
of Business Legitimacy: Responsibility, Ethics and Society, pp.489-507.
Chiappinelli, E.A., 2018. Cases and materials on business entities. Wolters Kluwer
Law & Business.
Coles, R., 2018. Ship registration: law and practice. Informa Law from Routledge.
Ekici, A. and Ekici, Ş.Ö., 2021. Understanding and managing complexity through
Bayesian network approach: The case of bribery in business transactions.
Journal of Business Research, 129, pp.757-773.
Howard, H.A., Wood, N. and Stonebraker, I., 2018. Mapping information literacy
using the Business Research Competencies. Reference Services Review.
Jebe, R., 2019. The convergence of financial and ESG materiality: Taking
sustainability mainstream. American Business Law Journal, 56(3), pp.645-
702.
Munawir, Z., 2020. Legal Contract of Stall Lots to Support Business and Merchants
Security. International Journal of Future Generation Communication and
Networking, 13(2), pp.1683-1688.
Tikotsky, A., Pe'er, E. and Feldman, Y., 2020. Which nudges do businesses like?
Managers’ attitudes towards nudges directed at their business or at their
customers. Journal of Economic Behavior & Organization, 170, pp.43-51.
Van Dycke, L., 2021. Accumulation by dispossession and African seeds: colonial
institutions trump seed business law. The Journal of Peasant Studies, pp.1-
32.
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