Legal Aspects and Government Influences: Workwear Ltd. Unit - Case Study Example

? INTRODUCTION Before we can come to any conclusion about which business best fits in this criterion, let us first look at some of the disadvantages and advantages of a partnership business and a limited company. From the analysis, we will be in a position to know how to advise the afflicted. Definition of a partnership business A partnership business is mostly run by people who come together for a common interest of making profit through running the same business. ADVANTAGES OF A PARTERNERSHIP BUSINESS This is viewed as the easiest way of starting a business especially where the turnover is low. The business partners share all the profits and the losses. All the liabilities and decisions are made together. Partners can have different skills and this may help the business partners to develop their business. In terms of capital, all the partners are supposed to contribute towards the business. It therefore follows that the more the capital, the greater the business and its potential of growing which will ensure that the partners enjoy better profits. Partnership can ensure flexibility in a way that it is easy to form manage and run. Their regulations are not as strict as those in companies. The partners decide on what to be done as there are no stake holders. If all partners can come to an agreement, then, it is most flexible when it comes to management. The partners share responsibilities in the business. When sharing responsibilities, everyone is able to make the best out of their abilities. They can decide to split their business responsibilities according to their best suiting abilities. For instance, if a partner is good in mathematics then he might be given the responsibilities of the accounting department. During the process of decision making, the partners can help each other on different ideas therefore come up with the best fitting solution to the business problem. DISADVANAGES OF A PARTNERSHIP BUSINESS It is unfortunate that families and friends may come together to form a partnership business and end up at loggerheads. This is a common occurrence in any partnership business. This fall outs can happen on personal or business basis. Disagreements are bound to occur between partners. Partners may differ on how to run a business. A conflict may arise from responsibilities and the best interests of the business. These disagreements harm the partners as well as the business itself. All partners should be an agreement on all the decisions made in the company. This rule should be honored even if either of the partners is in disagreement with a particular decision. This reduces the freedom of members to change uncomfortable rules in the business. Partners are all vulnerable to a lot of liability. This goes hand in hand with saying that all losses and risks are responsibilities of all the partners. Taxation can affect a business negatively as they are supposed to pay their taxes like in the sole proprietorship. They register with the HM Revenue customs as self employed. The better the performance, the higher the taxation rates on individual levels. LIMITED COMPANIES According to (Adrian, A company ware house, 2010), “is a company whose liability is limited.”When it has been set up, all the entrepreneurs are to keep their assets and capital plus their interests from the business. This will therefore enhance their ability to conquer business risks without tampering with their personal possessions as it allows the stake holder to pay for an occurred risk up to the amount they have put into the company. A limited company can direct another company. Limited companies can be classified into three types. They are PLC’s, Private limited companies and public limited companies. ADVANTAGES OF A LIMITED COMPANY Limited liability ensures stake holders of their financial security. As long as they can pay their debts to the maximum of what they invested, their private property cannot be tampered with. A limited company is a separate entity from its owner. The company will continue its existence even when the initiator is nowhere to be found or even dead. Employees and other members are sure of their jobs existing in the future. This is an advantage that the limited companies have over the other companies. In terms of taxation, these companies pay their taxes on the profits discovered. Their rate is only 21% unlike in partnership where their rates are almost double of this. Limited company forms can also be used to benefit the employees of this place. If a minimum pay of ?6,475 is not reached for the stakeholder, then he is not supposed to be taxed in any way. Another advantage of limited company can be started in the house. Directors are the main stakeholders in a limited company. They control their own businesses and manage them. This means they can make decisions by themselves and search for better way their business can grow. The company name is important so that it can be identified in all the aspects of the market. This sets it apart from others and protects it. Employees can be rewarded for their good work when they are allowed to buy some shares in the company. It also works as a motivation for the employee to put in more effort in the business for success. DISADVANTAGES OF LIMITED COMPANIES A lot of rules govern this type of business especially in the accounting department. This is very expensive leave alone wasting a lot of time. Disagreements are bound to occur as directors may have different opinions on different ideas. When selling of share to other stakeholders increase, there is dilution of power in the management department. Raising of capital in the business is restricted in the sales of shares. DECISION It is now evident due to the facts above that it is more advantageous to run a limited company rather than a partnership business. Work wear business should consider this option. How should a limited company share loses and profits? Each partner in work ware business is entitled to a share referred to as distributive share. It is not a requirement for partners in a business to have a constitution to guide them but it is wise to have one. It might be costly to do so because a lawyer is required but it will settle some disputes that would have or may have occurred. According to (Cagan, n.d), all losses and profits have to be distributed accordingly to all the partners. Taxes should be paid by all the partners even if they did not make any profit that month. The partners should share all profits and losses on the basis of their capital to practice equity. Some businesses prefer using different percentages as equity of shares changes with time. When splitting up profits and losses, it is the nature of this type of business to experience flexibility. It is not like in cooperates where equity is the main thing. They can split this profits and losses the way they want provided they make sure that they have an agreement to do so and preserve it as a document for further referencing. When one partner decides to leave partnership business, according to (Sweeney, 2008), he should be awarded a part of the business as well as a share of profits made until the business is closed. “He should also be appreciated in reference to his commitment since he joined the business to the time he is leaving the business. If there is no written agreement on how one should be treated when he decides to leave the partnership business, Wis.stat.ch.178(2003-04)in the uniform partnership Act should be relied on to give valid conclusions. The partnership continues to exist until the end of its mission is reached. Partners discuss and agree on how to share their business with the outgoing partner. If this does not work, then the leaving partner can sue his partners so that the assets of the business can be liquidities and all the creditors can be paid off. All the remaining money can then be divided between the partners equitably. Another option would be that the partners continue to do business normally but pay him his share after every month. If they do not honor this, then he has all right to sue his partners. Most state laws put it that partnership is terminated immediately an individual ceases to be a partner. About the backfired business deal with the local authority, it should be noted that Bridge and Anna did not do a good thing. That was dirty business. According to (Schaefer, n.d), all the partners were responsible for the business profits and losses. No partner has complete control of the business and decisions should be made by all of them. No one should have different conclusions as this can lead to a very serious fall out and may cost your personal relationship. Remember, “Friendship founded on business is a good deal than business founded on friendship” (Schaefer, n.d). Before deciding to get into a partnership business, it is good to thoroughly investigate your partners. Find out if you also have a habit of doing things alone. This will be a sign you that you are not a fit person for partnership business. Ask yourself the following questions to find out if a partner is a perfect match for the partnership business. Find out if you have the same values, motivations and similarities. Are your visions similar and your ideas compatible? Do you have similar objectives in life? Do our skills and abilities complement each other? How is our communication? Is it respectable and comfortable? What about the trust that you hold to each other. Is it healthy? Have you checked the background of your partner and found it to be clean? It is very different the way you handle someone on social and business basis. Always look for absolute clarity in a business agreement and make sure it is written on paper including all the required responsibilities of all the partners involved. Involve a lawyer in all the disagreements you have in a business premise so that he can keep things sane legally. Ike in the case of the undesired outfits, a lawyer can come in to talk to James to reach a consensus. They might decide to take it to court. Restructuring laws According to (Johnen, 2006), many companies have been restructured of late. Since there is need to reduce the number of workers in this business and a new machine needs an expert operator, it means that this should be done without delays. You can sometimes loose the vision of long term objectives and concentrate on the one at hand. These restructuring include attracting more market, hi tech technology, slice on poor performing employees, and reduce the company’s costs and increase capital. There should be an independent moderator who should lead negotiations on the dos and don’ts since it is hard to reach reasonable decisions at this time. He will ensure a clear objective on the ideas that will be discussed. He will generate ideas, design strategies and sustain momentum ensuring credible decisions are made and an improvement plan has been drawn. Qualified management is the essence of any business and partnership business is not an exception. There should be a lot of trust given to the management department. A customized solution will be needed in laying a stable foundation for strategic collaboration. A balanced solution should ensure that all the business partners benefit financially. All loans should be repaid. While there is cutting of costs, increased profits and increasing the capital, there should also be a solid financing whereby this is likely to survive that liquid. Redeployment of staff and contracts Redeployment may affect the contract of employees. This includes termination of duties, changes in duties, roles performed by the employee and other working practices. This applies especially to open ended contracts. It normally does not apply to academic employees because they are covered by statue 18. Issues may arise from the ability of the employee’s performance or behavior. They should be dealt with differently. The managers of a business should not wait until the contract time has expired if they are not contented with an employee’s performance. The UK economy and its effect on the work wear house (Oxlade, 2012) notes that in the last quarter of 2011, there was a 0.3% inflation of the economy in the UK. 0.2% inflation was felt in the last quarter of 2012. This improvement was a measure of its technical recession which every expert was expecting. This recession may not last for long and neither will it be felt all over states. It is a mild one and it is likely to be gotten over easily. This affects the treasury a great deal in that they had planned to reduce its debt. This is mixed up with several other problems like austerity and the economic growth. This period is really discouraging. According to (Oxlade, 2012), This recession period is going to affect the work wear business in that according to (Oxlade, 2012). This will affect this business in that the VAT will rise. The work wear business is also supposed to straighten its finances. They are supposed to decrease their expenditure and pay off any debts that the business has. In October, the government’s plan is it to deploy more money to the bank so that they can be able to lend it to businesses and companies. This might improve the chances of work wear to improve its business in the hard times of recession. This will not in any way solve inflation. Wealth could be eaten away and hiking of interest rates is expected so that the government may check inflation. This will increase borrowing costs and the economy is bound to be even worse. Reduced spending has decreased demand significantly; therefore it means that work wear will not have an easy time at all when running their business due to the inflation. Online business and the work wear The weakening pound made British products cheaper, helping exporters. Due to inflation a lot of important areas in economy are affected. According to (Economy Watch ;follow the money, 2010), they include; Investment will be affected as people will start using the money they usually save for buying. Their savings will be low. The people who will survive here are those with stable accounts. Interest rates will rise as inflation makes the value of money to go down. When this happens the purchasing power is diminished. People will use more money in the market unlike usually. Exchange rates will in fluctuate and trade will be affected especially the business across the borders. Why trade with the EU member countries? There are a number of advantages when dealing with the EU market. You are sure of enjoying a wide market. Currently the EU has introduced a number of measures to make trade on these countries possible. These measures include: a reduced bureaucracy and paper work, there are harmonized laws and standards, there is total freedom of movement of people and goods, and the euro is being used as a common currency in all the Eurocentric countries. Legislation rules online Online legislation for the EU community is working hard to improve services on line. They have combined a set of rules that protect both the buyer and the end user. For example additional options have been added when doing online business for the customers (Farivar, 2012). The customers can now access a more transparent market of goods and services. Customers can be adamant to pay if the purchase was not delivered as agreed. The customers online will enjoy a more transparent access to information because websites have been asked to do so. The customer cannot make copies of this content. Hidden charges have been eliminated from the websites, customers will be given 14 days to change their decision if they so wish, customers have a wide base to ask for refund if the deal was unsuccessful, there are clearer terms, common rules makes business much easier. The help by Department for Business Innovation and Skills This department teamed up with the treasury department and set up ways which yielded success. They indentified the issues affecting these businesses and tried to work on them. The launching of 6 schemes worth ?20 billion, support businesses like this one helped the UK economy. REFERENCES Adrian., 2010. Advantages and disadvantages of a limited company. Available at: Adrian., 2010. Advantages and disadvantages of partnership. Available at: Cagan, M., Distributing partnership profits and losses. Available at: Economy Watch, 2010. Follow the money. Available at: Farivar, C., 2012. DW. Available at: Johnen, U., 2006. Restructuring the rule of three. USA: Roland Berger Strategy Consultants. Lord, E., 2011. Buying into communities. UK: local government association. Oxlade, A., 2012. Economies watch how long Britain’s recession last. Available at: Schaefer, P. (n.d). Partnership. Available at: Sweeney, S. M. (2008, October 28th). What happens when one partner leaves apartnership. Available at: Read More