Legal Provisions Concerned with Business Units :: Business Management Companies Essays

Legal Provisions Concerned with Business Units Our client is in the process of forming a company. She wishes to avoid personal liability upon any contracts she may enter into on behalf of the proposed company. Our job is to design a report to explain the legal provisions concerned with the formation, management and dissolution of business units. The report will identify the relevant legal principles, which can influence the choice of business unit. Explain the differences in the regulatory approach adopted for partnerships and registered companies and describe the procedures for the dissolution of business units. At the end of the report we will advise our client what type of company would be best suited to her needs. There will also be a presentation to go with the report highlighting the main points. 2.TYPES OF COMPANY There are many different types of business unit. Each is formed by a group of people with a common aim. Britain has what is known as a mixed economy where goods and services are supplied by both private and public sector organisations, as shown in the following diagram: Private Enterprise Sole Trader Partnerships Limited Companies Co-operatives Private Public Retail Producer Public Enterprise Public corporations Government Departments Local Authorities The private sector/enterprise is the term used to describe all businesses which are owned by individuals or groups of individuals and run essentially for profit. About half of all trading in Britain is controlled by private sector organisations. The other half known as the public sector/enterprise are businesses which are owned and controlled by the government or Local Authorities and run for the benefit of the country. The sector this report is concerned with is the Private Sector. 2.1 SOLE TRADER This is the oldest, simplest and therefore most common form of business unit. A sole trader is one who conducts their business by themselves either using their own name or a business name. This is somebody who is self-employed and who usually starts a business with capital from their savings or by borrowing from friends or a bank. Capital is the money which every business needs to enable it to set up and operate, for example to buy premises, equipment, stock and pay wages. The main advantage is that you can be flexible. You don’t need to discuss with others (e.g. partners and directors) how you are going to run the business. You also have less paperwork. A sole trader is not necessarily a one-person business and may have many employees or branches. However, the business is owned by one person and it is they who receive the profits. ADVANTAGES DISADVANTAGES - Business affairs can be kept private except for completing tax