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Business Organizations

This chapter will examine different types of business organizations in Scotland and different legal rules that govern them.

It is essential that the business owner seriously considers the various forms of business organizations. First of all, to know all issues concerning the opening budget, investment attraction, income taxes, shutting down the business etc.

 

4.1 The Sole Trader

If an individual whishes to start a business on his/her own the sole trader, “one-man” business, is the appropriate decision. Accordingly, all business profits are the owner’s, as well as losses (Underhill et al, 2015).

In order to invest in the business a sole trader can put his own money or use different institutions for a loan. However, the are limited in money source, as they are not allowed to persuade the investment of other individuals money or attract partners with capital (Underhill et al, 2015).

Sole traders have unlimited liability, meaning that in order to cover the business debts a private property can be confiscated. In case the sole trader cannot pay his debts, the creditors can dissolve the business (Bankruptcy Scotland Act 1993)

The process of terminating the business of the sole trader is less time consuming and complicated. When the business is closed, assets are sold, debts are paid and liabilities are implemented a sole trader can retire to the country and send a reminder.

Generally, there is no law that restricts people from setting a sole trader business, therefore, it is available to anyone. However, once the trader has officially opened the business, he is obliged to follow the legal regulations (Underhill et al, 2015).

4.2 Partnership

The Partnership Act 1890 defines Partnership as “the relation which subsists between persons carrying on a business in common with a view of profit”. Setting up a partnership involves 2 up to 20 people that make an agreement of cooperation.

Section 4 of the Partnership Act 1890 claims that in Scotland a firm is seen as a separate entity from the partners that attend it. Therefore, the debts of the company are paid by the company, not by the partners. In case a business has no sources to pay back, liability of the partners of the firm is joint and several.

One of the important things to discuss while arranging the Partnership contract is the assignment of authority each partner will have. Any partner who infringe upon the agreement can be bound on the contract.

As for the liability to third parties, in Scotland the victim of unfair treatment or robbery in the person of one of the partners, first applies against the firm. In case, it cannot pay, an action can be brought against the partner who was involved in illegal actions (Bennet, D, 2015).

Business Premises

This paragraph outlines legal directions that the owner of business premises should follow.

 

5.1 Planning Legislation

In Scotland the main regulations are set in Town and Country Planning Act 1997. The need of such legislation covers the issue of usage of the land or building. A planning permission is required in order to record the changes of the venture or the building, because changes can have minor or major impact on the surround community, an example is provided in Appendix 1.



When is Planning Permission is required

· External changes for decoration or promotion purpose

· Change the structure and the use of the premises

· Changes that require additional sq.m below the ground

· Installation of illuminated signs

The law lays duties on those who possess or has control over the land and building. The Occupier’s Liability Act 1960 claims that the duty of the occupier is the provision complete customer safety. For example, the occupier must understand that children are less careful than adults thus prepare for this inside his premises. Although, the 1957 Act elucidates the difference between the lawful customer and the trespasser, Scots law does not. An occupier is responsible to provide safety of all visitors, even though some of them ignored such posters as “Staff only” or “No Entry” (McAllister, A 2015).


Date: 2015-12-24; view: 428


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