Unit 36 - P4 Kojar Ahmed
If i am aiming to start up a small business, i will have to first have to educate myself on the legal
aspects involved in the startup and management of a business.
There are many different rules, regulations and laws that businesses have to abide by if they wish to
operate legally without the threat of being fined or shut down. Firstly, before i can even begin to
operate as a business i must first acquire a business license, this is vital to the operation of a
business. Without a business license there is potential for legal consequences which could have
bigger repercussions on the success of my business. I must also make sure that the registered name
of my business does not coincide with or is not the same as another business. Not only does this
make it more likely that customers will get confused and discouraged from purchasing my product or
service, but i may also be breaking copyright law.
There are multiple different types of business which operate in slightly different ways, the way in
which i decide to run my business will depend upon how i wish to operate on a day to day basis. The
first type of business i will talk about is sole traders. Sole traders do not work with partners or other
businesses, this may also extend to employees and loan providers such as banks. By being a sole
trader, i will be the sole owner of the business and will be personally liable for any business debts and
transactions, this is known as unlimited liability. There are certain advantages and disadvantages to
being a sole trader, these are:
Advantages of being a sole trader:
● Not many legal restrictions on running a business
● Allows for a more personal service to the customer
● Easier to maintain direct control of the business, make decisions and implement changes
quickly
Disadvantages of being a sole trader:
● Unlimited liability
● Business growth is limited to how much capital the sole trader has
● No one to share the responsibility of the business with
A partnership is a type of business organization in which two or more individuals pool money, skills,
and other resources, and share profit and loss in accordance with terms of the partnership agreement.
Source: http://www.businessdictionary.com/definition/partnership.html
Advantages of being a partnership:
● An increase in the levels of expertise available
● A partner can introduce additional capital to the business
● Responsibility can be shared
Disadvantages of being a partnership:
● Disputes can cause problems
● Growth restricted to the amount of capital that can be raised
● Profits are shared
A limited liability company (LLC) is a corporate structure whereby the members of the company
cannot be held personally liable for the company's debts or liabilities. Limited liability companies are
essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole
proprietorship. While the limited liability feature is similar to that of a corporation, the availability of
If i am aiming to start up a small business, i will have to first have to educate myself on the legal
aspects involved in the startup and management of a business.
There are many different rules, regulations and laws that businesses have to abide by if they wish to
operate legally without the threat of being fined or shut down. Firstly, before i can even begin to
operate as a business i must first acquire a business license, this is vital to the operation of a
business. Without a business license there is potential for legal consequences which could have
bigger repercussions on the success of my business. I must also make sure that the registered name
of my business does not coincide with or is not the same as another business. Not only does this
make it more likely that customers will get confused and discouraged from purchasing my product or
service, but i may also be breaking copyright law.
There are multiple different types of business which operate in slightly different ways, the way in
which i decide to run my business will depend upon how i wish to operate on a day to day basis. The
first type of business i will talk about is sole traders. Sole traders do not work with partners or other
businesses, this may also extend to employees and loan providers such as banks. By being a sole
trader, i will be the sole owner of the business and will be personally liable for any business debts and
transactions, this is known as unlimited liability. There are certain advantages and disadvantages to
being a sole trader, these are:
Advantages of being a sole trader:
● Not many legal restrictions on running a business
● Allows for a more personal service to the customer
● Easier to maintain direct control of the business, make decisions and implement changes
quickly
Disadvantages of being a sole trader:
● Unlimited liability
● Business growth is limited to how much capital the sole trader has
● No one to share the responsibility of the business with
A partnership is a type of business organization in which two or more individuals pool money, skills,
and other resources, and share profit and loss in accordance with terms of the partnership agreement.
Source: http://www.businessdictionary.com/definition/partnership.html
Advantages of being a partnership:
● An increase in the levels of expertise available
● A partner can introduce additional capital to the business
● Responsibility can be shared
Disadvantages of being a partnership:
● Disputes can cause problems
● Growth restricted to the amount of capital that can be raised
● Profits are shared
A limited liability company (LLC) is a corporate structure whereby the members of the company
cannot be held personally liable for the company's debts or liabilities. Limited liability companies are
essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole
proprietorship. While the limited liability feature is similar to that of a corporation, the availability of
