Business Organisation in United Kingdom
Business Organisation in United Kingdom.
Author: Reinel Bonora.
Owner and director at "Diamond Angel Home Services LTD"
Introduction:
"Brief history emergence of capitalism"
During the fourteenth century, feudal society suffered a great crisis due to a demographic decline caused by the decline in agricultural production, which led to a shortage of food, which led to famine and epidemics due to poor food and hygiene of the population.
From the fifteenth century, significant transformations began to take place in the economic, political, social, and cultural life of Western Europe, which shaped what is known as Modernity.
In the economic aspect, during the XV and XVI centuries, the feudal forms of production were maintained. Despite this, the bases for the emergence of capitalist forms - that is, economic forms of life based on the division of labour and capital - began to settle in Italy and in Flanders, whose full validity was only recently attained. Century XVIII.
The first great forms of capitalism were developed in the fifteenth century. They arose thanks to the combination of a series of factors, among which are:
- The original accumulation of capital. That is, the capital accumulated through usury, expropriations, rapine, etc.
- The proliferation of salaried labour.
- The existence since the thirteenth century of manufacturing.
To propitiate the union of these factors conveniently, there was first to be an increase in commercial activities. This was largely possible thanks to the discovery of silver mines in Central Europe, which allowed large amounts of money to be circulated in order to provide a conducive medium of exchange. This money, in currency, facilitated the long-distance purchases, which increased the number of buyers.
With this situation, important commercial companies were created, whose profits were partly invested in businesses. Thus, emerged the figure of the entrepreneur, who provides everything necessary for production: capital and instruments of work, and hires hired workers. Therefore, for the first time two well-defined groups emerged as to their functions: the capitalist or supplier, and who contributes their labour in return for a salary.
Industrial and financial capitalism has gone through many changes and challenges in the twentieth century.
- First, with the Russian Revolution of 1917: he proposed the construction of a communist society.
- Inner crises, inherent to the operation of the system. After World War I (1914-1918): The United States emerged as an industrial power and began to produce goods for a Europe devastated by the conflict.
- Since the 1970s, financial capitalism has entered a new phase, called by some economists, the Third Industrial Revolution: This gives rise to the phase of the Information Age, e.g. the development of domestic computers, which Became popular with the rise of the Internet in the 1990s.
According to Wikipedia; the UK economy is the fifth largest national economy in the world as measured by nominal GDP and the 9th in the world as measured by purchasing power parity (PPP), which accounts for 4% of world GDP; It is the second largest economy in the European Union by both metrics.
By 2015, the UK was the ninth largest exporter in the world and the sixth largest importer, and had the second largest stock of foreign direct investment abroad.
It is one of the most globalized economies, and consists of (in descending order of size) the economies of England, Scotland, Wales, and Northern Ireland.
The services sector dominates the UK economy, accounting for about 78% of GDP; The financial services industry is particularly important and London is the largest financial centre in the world. Britain's aerospace industry is the second or third largest national aerospace industry, depending on the measurement method. Its pharmaceutical industry plays an important role in the economy and the UK has the third largest share in global pharmaceutical research and development. Of the world's 500 largest companies, 26 are based in the United Kingdom.
The British economy is boosted by North Sea oil and gas production; its reserves were estimated at 2.9 billion barrels in 2015, although it has been a net importer of oil since 2005. There are significant regional variations in prosperity, with South East England and southern Scotland being the richest areas per capita. The size of London's economy makes it the largest city by GDP in Europe.
Currency
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Pound sterling (GBP)
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6 April – 5 April
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Trade organisations
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European Union (preparing to exit), OECD, AIIB and World Trade Organization
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Statistics
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$2.849 trillion (nominal; 2015)
$2.679 trillion (PPP; 2015) | ||
GDP rank
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GDP growth
|  +0.6% Q3 2016 ONS +2.3% for year 2016 | |
GDP per capita
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GDP by sector
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Agriculture: 0.6%
Construction: 6.4% Production: 14.6% Services: 78.4% (2014 est.) | |
| 0.9% (October 2016) RPI:  2.0% (November 2016) | ||
0.25%
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Population below poverty line
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15% (2014 est.)
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 0.32 (2014) | ||
Labour force
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31.75 million (June 2016) (Employment rate 74.5%, record high.)
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Labour force by occupation
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Agriculture: 1.5%
Industry: 18.8% Services: 79.7% (2011 est.) | |
Unemployment
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4.8%, 1.60 million (September 2016)
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Average gross salary
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£30,000 / $49,000 annual (2014) (8th highest)
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£21,000 / $35,000 annual (2011) (6th highest)
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External
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Exports
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Export goods
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List[show]
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Main export partners
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2015:[10]
 United States 14.6% Germany 10.1% Switzerland 7% China 6% France 5.9% Netherlands 5.8% Ireland 5.5% |
Imports
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Import goods
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List[show]
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Main import partners
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FDI stock
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Gross external debt
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 −£182 billion / 9.1% GDP (2012) | |
Public finances
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Revenues
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Expenses
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Economic aid
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0.7%, $19.0 billion (2015) (donor)
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Foreign reserves
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$1.321 trillion (2012)(3rd)
$9,591 billion (2014) (
£56 billion (2016–2017 FY)
Dissertation
Business sectors in the UK:
Business sector in the UK are divided in three:
Primary Sector: Is the sector of an economy that makes direct use of natural resources (Extraction & Row materials). This includes:
- Agriculture
- Fishing
- Mining.
Secondary Sector: Are those that take the raw materials produced from primary sector and process them into manufactured goods and products (Manufactory & Process).
Examples:
- Heavy manufacturing.
- Light manufacturing.
- Food processing.
- Oil refining.
- Energy production.
Tertiary Sector: Product Ending Journey. Is also called the services sector, and involves the selling of services and skills. They can also involve the selling goods and products from primary and secondary sectors.
Examples:
- Health & Services.
- Transportation.
- Education.
- Entertainment.
- Tourism.
- Finance.
- Sales.
- Retail.
Also, there’s another sector that are emerge in 21 centuries and it is call:
Quaternary: Consist of those industries that providing information services. Example:
- Computing.
- ICT (Information and Communication Technologies)
- Consultancy (offering advice to business).
- R&D (Research, particularly in scientific field)
Note: This sector is sometime included with the Tertiary Sector, as they are both service.
Business organisations in the UK:
- Private sector: Is the part of the economy that seeks the profit motive in its activity and is not controlled by the State.
A private company refers to a business that is owned by private investors, non-governmental, shareholders or owners (generally as a whole, but may be owned by a single person. Private enterprises constitute the private sector of the economy.
- Public Sector: Public corporation, state enterprise or state corporation is that which is owned by the State, either in whole or in part.
The defining element in public enterprise is the ability of the State to exert direct political pressure on the company.
- Non-for-Profit-Sector: Is an organisation whose finality is not the pursuit of an economic benefit but mainly pursues a social, altruistic, humanitarian, artistic and / or community purpose.
These types of organisations are usually financed through grants and donations derived from individuals, companies, and institutions and organisations of all kinds.
Differences between a Private, Public, and Non-profit Company.
Private
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Public
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Non-profit
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Belong to private individuals.
owned by private investors, non-governmental, shareholders or owners (generally as a whole, but may be owned by a single person)
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Belong to the public sector (central or local administration)
Are considered public as long as 51% of the shares are held by the public sector.
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The organization may be controlled by its members who elect the Board of Directors, Board of Governors or Board of Trustees. A non-profit may have a delegate structure to allow for the representation of groups or corporations as members.
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Seek to maximize its profits, sales, or market share.
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The public company does not seek to maximize its profits, sales, or market share, but rather seeks the general interest of the community to which it belongs.
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They do not work for money, they work for the benefit of the community.
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The company, rather than the individual owners, is held responsible for its actions. The owners' potential loss is limited to the amount that they have invested in the company.
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The power of initiative comes from the State, which exercises it establishing its objectives and controlling its activity.
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Can be administered by salaried people, in many cases there are volunteer programs to support social goals with time and / or money.
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Private enterprise does not produce the most necessary items for a country.
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The public companies produce in the great majority the articles that a country needs, no matter what their margin of profit.
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Works for the progress, development or common good of society, focusing on certain groups or people with special or generally vulnerable needs, such as children, the elderly, etc.
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If the company has any problem, whether economic or legal, the State is not obliged to solve it.
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Public debt is used to finance large infrastructural capital projects or to smooth out cash flow imbalances.
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Most countries have laws that regulate the establishment and management of NPOs and that require compliance with corporate governance regimes. Most larger organizations are required to publish their financial reports detailing their income and expenditure publicly.
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Ownership Sectors:
The main types of O/S in the UK are:
- Sole Trader.
- Limited Company.
- Business Partnership.
*Also, we can create an unincorporated association like sport club or voluntary group and don’t plan to make a profit.
*We can use other structures for business that help people or communities, example:
“Social Enterprises”.
Ownership sector explanation:
Sole Trader:
This applies to those who planning to work for themselves. In this case, you’re classed as a self-employed, even if you haven’t yet told to HM Revenue and Customs.
Sole trader, run his/her own business as an individual, and you can keep all your profit after you’ve paid tax on them.
Sole trader, can employ staff. The term “Sole” do not mean that you have to work alone.
Tax responsibilities:
You must:
- Send a self-Assessment tax return once a year.
- Pay income tax on the profits your business make.
- Register for VAT if you expect taking more than £83.000 year.
Limited Company:
Is an organisation that can be set-up to run your business; it is responsible in its own right, for everything it does, and its finances are separate to your personal finances.
The company owns profits, after it pays Corporation Tax, the company can share its profits.
Ownership:
Every limited company has members who are the people that own share in the company. This type of business is running by “Director”. Directors often own share, but they don’t have to.
Type of limited company:
Limited by Share:
Most “Limited Company” are limited by share. This means that the shareholders responsibilities for the company financial liabilities are limited to the value of share that they own but haven’t paid for.
Private Company, Limited by Guarantee:
Directors or shareholders financial back the organisation up to a specific amount if go wrong.
Public Limited Company:
The Company’s share is trade public on a market, such as the London Stock exchange.
Tax responsibilities:
- It must be done every year: The company must…
- Put together statutory account.
- Send Companies House a confirmation statement.
- Send a HM Revenue and Customs a company tax return.
- Register for VAT if expect taking over £83.000 per year.
- Directors must fill a Self-Assessment tax return.
- Directors must pay tax and NI# through the PAYE system if the company pay them a salary.
Ordinary Business Partnership
You and your business partner or (partners) personally share responsibility for the business.
Profit are share between the partners. Each partner pay tax on their share of the profits.
Legal responsibilities:
Both are responsible for the share of:
- Any losses.
- Bills for things of the business.
Tax responsibility:
Nominate partner must send a partnership Self-Assessment tax return.
Each partner must:
- Send a Self-Assessment tax return.
- Pay income tax.
- Pay National Insurance.
- Register for VAT on gain over £83 000 per year.
Limited partnership and Limited liability partnership:
The liability for business debt differs depending on whether you are a limited partnership or limited liability partnership (LLP).
Limited Partnership:
The liability for the debt that can’t be paid in a limited partnership is split among partners.
Partners responsibilities differ as:
- General partners can be personally liable for all the partner’s debts.
- Limited partners are only liable up to the amount they initially invest in the business.
Limited Liability partnership:
LLPs, are not responsible liable for the debts the business can’t pay; their liability is limited to the amount they invest.
Tax for Limited Liability and Limited partnership:
- Send a Self-Assessment tax return.
- Pay income tax.
- Pay National Insurance.
- Register for VAT on gain over £83 000 per year.
Unincorporated association:
Is an organisation set up for a group of people with a reason other than make a profit; example:
- Voluntary group.
- Sport group.
It is not necessary to register this type of association, and it doesn’t cost anything to set one up. Individual members are responsible for any debt and contractual obligations.
Compare three different organisations in terms of size, aims and the economic sector in which they operate.
Business # 1:
This company is managed under Sole Trader sector. The owner is responsible for paying its own government contribution and insurance.
Staff are self-employed and usually working under temporal contract. This business is classified as a Micro-Business because they are not more than 10 staff working at one time.
The economy sector in which operate is a Tertiary sector in Property Renovation.
Its aims is to gain market space and recognition.
Business # 2:
This business is managed under Business Partnership.
Each partner has a specific function and each one are responsible for any business debt.
Staff are self-employed and are responsible for their own government contribution and insurance. They are no more than 49 staff working at once time so, is considered as a Small Business.
The economy sector in which operate is the Tertiary sector in Property Renovation.
Their aims are to invest at the many properties as possible for a long term letting investment.
Business # 3:
Acorn Commercial & Development Division is part of the Acorn Group - one of the largest independent estate agents in the UK. The Acorn Group incorporates Acorn Estate Agency, Langford Russell Estate Agency, John Payne Estate Agency, Unique Properties, Start Mortgages, and MAP Chartered Surveyors.
Established in 1984, the group is privately owned and has approaching 30 years’ experience and with approximately 325 staff and over 32 offices and divisions; the group covers all aspects of property from residential sales and lettings through to new homes, property management, estate management, mortgages / finance, and conveyancing. Also, covered through the Commercial & Development Division is commercial, investment and land & development agency.
The Acorn Group LTD (limited company is a separate legal entity from its owners).
Directors' responsibilities (https://www.gov.uk/running-a-limited-company/directors-responsibilities)
As a director of a limited company, you must:
- try to make the company a success, using your skills, experience, and judgment
- follow the company’s rules, shown in its articles of association
- make decisions for the benefit of the company, not yourself
- tell other shareholders if you might personally benefit from a transaction the company makes
- keep company records and report changes to Companies House and HM Revenue and Customs (HMRC)
- make sure the company’s accounts are a ‘true and fair view’ of the business’ finances
- file your accounts with Companies House and your Company Tax Return with HMRC
- pay Corporation Tax
- register for Self-Assessment and send a personal Self-Assessment tax return every year - unless it’s a non-profit organisation (e.g. a charity) and you didn’t get any pay or benefits, like a company car
This company is classified into the Large-Size-Business.
The economy sector in which operate is the Secondary sector. They build and managed the largest multi-brand boutique estate agency group in the UK, with more than £750m wort in property last year.
Their aims are continuing expanding and creating more offices across UK.
These three organisations have a variate numbers of similitude and differences.
Similarities:
- All three develop into the construction industries.
- All of them use a varieties numbers of employee.
- All three work for money.
- All three aims to expand.
- They are locking for new opportunities.
- They must pay Tax on capital gain.
- They all are base in Manchester area.
Difference:
- The number of staff are considerable different.
- The amount of investment between them, are highly different.
- The profit over their investment are very different.
- Different structural organisation (Sole Trade, Partnership, LTD).
- They are working in the secondary and Tertiary economy sector.
Summarizing
Since the rise of modern capitalism, the government and organizations have been responsible for maximizing the performance and control of companies, in order to create a suitable legal environment for olds and new entrepreneurs.
These legal aspects allow the government to strike a balance between both, the interests of citizens and the individual interests of entrepreneurs.
Bibliography
https://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom
http://www.escuelapedia.com/capitalismo-industrial/
http://www.acorncommercial.co.uk/the-group/
https://www.gov.uk/running-a-limited-company/directors-responsibilities
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