BUSINESS

LAW
How different types of
business organizations
are legally form
FORMATION OF SOLE
PROPRIETORSHIP BUSINESS:
 Select a name for the business. There is no bindings to
select a name for it. The name can be a existing name
too. But they cannot use ltd. or llp. after the name.
 It is up to the owner to register the business.
 Getting necessary documents like trade license and tax
numbers

 Keeping records of the business.

PARTNERSHIP BUSINESS LEGAL
FORMATION:

 The contract is the most fundamental element of this

business.
 There is no binding for a contract to be written or verbal
but it's necessary to be written .
 Some topics are mandatory to be present in the contract
paper according to the Partnership business law 1890 in
the United Kingdom (Practical Law, 2019).
 First of all the business should be registered.
 An employee verification number is needed
 License is requisite by the government to conduct partnership
business
 There should be a bank account named by the partnership
business where the transactions of the partnership business
will be conducted.
COMPANY BUSINESS AND ITS LEGAL
FORMATION:

 The name of a company should be sole. There should be

no other organization named after the selected name. Even
a little similarity may require changing the name. The
name cannot be offensive and should be end with Limited.
 There should be a board of director selected. Directors
operate the company. The directors have to be the citizen
of the United Kingdom and Their name must be addressed
into the article.
 Actual owners of the company are the shareholders.
(Examveda, 2019) The companies liability is limited
background of its share. Shareholders the the right of choosing
directors and giving opinion before initiating any kind of big
decisions by voting. There is no maximum price of a share.
The company is bound to provide information about their
share. To sell share company has to undergo a process called
initial offering through share exchange. But before initial
offering it should be register in the United Kingdom stock
exchange.
 The Memorandum of association must be signed by the initial
shareholders as an agreement to it. it is mandatory to
form a company. The article of association describes how
the company will be operated.

 The company an actual address where it will be situated.

 How business
organizations are
managed
 Ensuring effective communication: As a first task to
ensure sound management, There must have effective
communication among every wing of the organization.
It’s a fundamental need.

 Sharing opinions: A sound management body

appreciates point of views from the employees. And this
makes the management more efficient.
 Progressive environment: They always intend to cope up
with the changing nature of the world. World is changing, so
the strategy and environment also need to change to provide
best management that goes with changing world.

 Authority and Responsibility: In order to secure sound

managing of an organization, there must have a dedicated
authority and responsibility towards internal and external
parties.
 4 M’s of Business: Men, materials, money and machinery are
4M of business. 4M are extremely fundamental part of
organization because organization is made up of these 4Ms.
Proper direction and relation between them is a result of perfect
management.

 
 Effectual planning and team work: Planning is a frontline task
of management body. To pursue the goal organization, they make
an effectual and sophisticated planning and to make a plan
successful they believe in team work.
 Funding system of
Business organizations
FUNDING BY OWN:
Funding a business by own is an appropriate example of sole
proprietorship business. Most of the sole proprietorship
business owners use their savings and other personal assets to
fund their business. Self funding is a cost free funding process
for business.
FUNDING FROM RELATIVES:

When personal savings and assets become insufficient to

fund a business and the owners of small businesses often
borrow money from their relatives and friends. Relatives
and friends often lend money without any intention of
profit so it is also considered as a cost free funding process.
BANKS AND FINANCIAL
ORGANIZATIONS:

Banks are a source of funding for almost every kind of

businesses. Sole proprietorships to company businesses
often loan money for funding their businesses. Banks
charge for loan by an interest rate allowed by Central
Bank. Though interest seem a burden to the organizations,
in case of large amount funding only the financial
organizations can help instantly . So it's a great supplement
for funding businesses.
INVESTORS:

There are many parties who show interests in investing

money if they see probability of earning profit. Investors
are a adequate way of funding.
SHAREHOLDERS:

Company businesses can sell their shares in order to collect

capital to operate the company. After registering its name
into the stock exchange the company officially sells its
shares to the public. the money from selling shares is used
as companies capital and the capital is utilized to manage
the company in it’s best way.
REFERENCES:
 Volusion, 2019. Popular type of businesses. [Online] Available at:
https://www.volusion.com/blog/business-types/ [Accessed 14 June
2020].
 Practical Law, 2019. Partnership. [Online] Available at:
https://uk.practicallaw.thomsonreuters.com/8-107-6976?
transitionType=Default&contextData=(sc.Default)&firstPage=true&
bhcp=1 [Accessed 14 June 2020].
 your article library, 2019. Documents Issued by a Company.
[Online] Available at:
https://www.yourarticlelibrary.com/company/documents-issued-by-
a-company-memorandum-articles-and-prospectus/42053 [Accessed
14 June 2020].
 Examveda, 2019. Equity shareholders. [Online] Available at:
https://www.examveda.com/which-shareholders-are-the-real-
owners-of-the-company-30447/ [Accessed 14 June 2020].
THANK
YOU
ANY QUESTIONS?