Essay
Unit 36 Starting a Small Business M3
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M3 assess the implications of the legal and financial aspects that will affect the start up of the business.
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Unit 36: Starting a Small BusinessM3: assess the implications of the legal and financial aspects that will affect the
startup of the business.
Introduction
This assignment focuses on the impacts of the legal and financial aspects
mentioned in P4 on the business, both positive and negative. It will also describe
the systems that can be put in place to ensure that the negative impacts do not
cause disruption on the business’ growth.
Legal Aspects
1. Legal Status
This is defined as the status that describes the classification or business sector of
the company. CCB is a sole trader company. This means that the business is
owned by one person. There are many advantages that comes with being a sole
trader. This includes not having many legal restrictions of forming the business,
easier to make decisions and maintain control, there is no need to share profits
that the business has earned and financial information is kept private. However,
there are also disadvantages the come with being a sole trader. Facing full
personally liability for any debts that the business may face. The growth of the
business may be limited to the amount of capital that the owner holds. There
may be difficulty finding time for holidays or sicknesses for there is no one to
share the responsibility with. These negative aspects can cause problems for the
business but this can be avoided by ensuring that the money is managed well
and the financial records are kept. Also, more employees can be hired so that
the business can have more help where needed and this can increase the
services which can help the business make more money.
2. Legal Liability
This is defined as who is responsible for/liable for any legal aspects/problems
that the business may face. Being a sole trader means that the business owner is
responsible for the all liabilities that the business may face and they are in
charge of all the financial aspects. Advantages of this is that as a business is that
there is no second party who is making payments. This means that you will not
owe anyone money or face any legal problems if the second party is not happy
with financial state of the business because they were unable to retrieve their
end. Also, because it is personal aspects, you get to decide what should be done
with it. However, negative impact can be faced if the business comes up against
any challenges such as being in debt or facing other legal problems. In the case
of debt, all the property in which the owner personally has can be seized to pay
off the debts. Having record systems to manage and monitor the financial
aspects can be of support.
3. Health and Safety, Fire regulations
This refers to the laws that were put in place to ensure the safety and security of
everyone within a business. The benefits of the laws are to ensure that the
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