The Different Types Of Business Law Company Business Partnership Essay

Published Date: 02 Nov 2017

It is a group of people, working together with common interest and objectives to achieve a common goal by using standard rules for everyone.

Business organization can be classified into different types based on the nature of business. There are mainly five types of business organizations in England.

Sole trader

Partnership

Limited liability partnership

Company

Public limited company

Private limited company

Conglomerates

Consortia

Multinational companies

Joint ventures

Sole trader

This is one of the most commonly used form of business organization. It is beneficial for small business because there is only one owner of the whole business. There is no paper work required for this type of business organization. It is suitable for cash oriented business, because the owner don’t have to make account books. It is the most easiest way of starting a business. The best thing about this is that owner can enjoy 100 % of profit by itself. There is no one except for the owner to make decisions required on spot.

On the same time are some limitations with this business organization as well like they need to work for long hours like may be from 9am to 9pm. The owner is the only person for all the liabilities and all the losses in the business. Business can only be successful until the life of the owner and if owner dies then the business dies as well.

No need to maintain the accounts books does not mean that there is no regulations of taxes on this type of organization. First they need to register their trading name according to law and then that name has to be on every invoice they made. Sole propretatior has to pay income tax on the profits and in some case also have to pay VAT. But on the same time there is no corporate tax.

Partnership

It is a contractual relationship between two or more individual for a combined business activity with agreed terms of profit and looses and the share in the whole business activity.

A partnership is between two or more people usually the maximum number of partners would be twenty. But according to the partnership act of 2002 some forms of partnerships can also have more partners, but the liability should be in limited in that case. an example of that would be some accounting firms, 3PLS(third party logistics) etc which can form partnerships and with more number of people in order to raise capital.

Partnership is basically formed to remove the obstacles of lack of expertise , capital and sometimes time needed for managing the business. Like if someone has capital for investing in a business but don’t have time to manage and on the same time of there is someone who has expertise to run a business and is free. They both make a partnership in order to run a business activity. So that both can have benefits from them. A partnership is usually formed by writing out a partnership deed in which all the details about partnership will be written down which include the profit and loses share etc. Due to the partnership usually individual partners are liable for the loses.

Limited liability partnership.

This is also a type of partnership in which all the partners are not held responsible for the act or mismanagement or corruption of another partner. It is basically a more secured way of making a partnership. it is basically a hybrid legal entity. Between a private limited company and a traditional partnership. this type of partnership can own assets in its own right. It can be sued and can sue as well in its own right. Personal assets of the partners are safe in this type of partnership, if the partnership has some liabilities. There are some rules for this type of partnership like they have to register it according to law. They have to publish the financials affairs. Plus a written agreement is highly recommended in this type of partnership.

Company

An artificial person made or created according to law with common seal and discrete legal entity. It is not affected by the death of any partner or member. [1] 

There are many way from which a company can get income like selling shares. This allows the company to raise capital in order to expand its operations. And the when the company receives the profit then it has to give it to shareholders in the forms of a dividend. If the company is performing good then the price of the share goes up and also the company pays a higher dividend and vice versa. The share holders in some companies also choose the board of directors. A company has a limited liability and has to follow the rules and regulations of companies Act and also has to register its name. for some companies it is also necessary to publish their accounts, so that everyone can look upon them before investing in that company. There are basically two types of companies.

Public limited companies.

Private limited companies.

Public limited company.

A type of company which has limited liability and also offered its share to public in stock exchange. These shares allow the shareholders to buy and sell shares according to their own choice. There are some rules for people working in those companies no to buy shares because they have insider information.

Private limited companies.

A type of company in which the shareholder has limited liability to creditors by the amount they have invested in the company. This means that the assets if the shareholders are safe if the company becomes bankrupt only the money invested in the company will be lost. This type of companies has less regulation as compared to public limited companies.

Conglomerates.

When two or more companies with different backgrounds work together to form a new company it becomes conglomerate. Both companies diversify from their original business because mostly their core activity area becomes so matured so there is no growth in that ares.

Conglomerates are limited companies. if the companies(conglomerates) are poorly managed then there is a significant chance of take overs.

Two British well renowned conglomerates SWIRE GROUP and JARDINE MATHESON with an experience of 100 years have a wide range of business like aviation’s, shipping and trading, finance, hoteling, and retail. Some other major conglomerates like Bae Systems, Google etc.

Consortia

A type of a company which is formed by the combination of groups, institutions or financial companies to make a joint ventures. It is a virtually integrated kind of a company. A consortium company can be formal or can be informal arrangement like takeovers of a large company over a small company. This type of company can be formed for short term period as well for overcoming some problem. If it is for short term then there are less rules and regulations but if for long term so they have to follow all the rules.

An example of this would be airbus industries which was formed as a consortium of different aerospace manufacturers. All the companies which have the speciality of producing some parts become specialist in their fields.

Multination companies:-

A type of company which exports and produce in more than one country and which is also registered in more than one company.

It is compulsory for this type of company to follow the rules and the regulations of the company in which it has been registered. Like they in Muslim countries companies like UNILVER can’t import the products which are not halal (according to Muslims law).

Theirs companies enjoy more benefits on the same time they have to follow all the rules and their business structure becomes so complex to handle.

These type of companies has to follow the rules like

Employment laws.

Legal entities and law of incorporation.

Tax laws.

Liabilities (public and private).

Contract laws.

Joint Ventures.

A type of company formed when two or more companies make a partnership for a particular objective is called joint ventures. Joint ventures are usually formed between limited companies which have two or more shareholders.

Joint ventures are usually formed for developing a new market or a new product. Both the companies pool their resources in term of man power, expertise, finance etc. for making it more competitive for the market. An example of this would be warid telecom it’s a joint venture between Singapore telecommunication and abu dubhi group. Singapore telecom pooled their experiences while abu dubhi group pooled finance in order to make a new telecom company in Pakistan.

Another example is DONGFENG HONDA. It’s a 50-50 joint venture between hond motor corporation and dong feng china to product cars in china.