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Business review 1 critically analyse the financial and legal responsibilities that apply to business owners and or to enterprise managers

Introduction to Business Idea

Business is the producing of goods and services in a bid to make profits. An entrepreneur develops a business idea aiming to close an existing gap of demand by the consumer while making profit. Every business has an owner and employees whom all work together in a bid to achieve the company goals. A social enterprise is a business that is set up in an aim to assist the community. They are usually small profit businesses that get their funding from the government and other large companies. The enterprises operate under two chief virtues, Social values, and financial constraints. Considering that most of the enterprises are not based on profit but rather on helping communities, investors do not look to invest in such businesses. To curb the financial constraints that these companies have in the UK, they have introduced schemes where investors of such programs are exempted from taxes. They have also created government funding projects to assist social enterprises. The review focuses on social supermarkets.

Social Supermarkets

While attempting to eradicate food wastage, a program where food from supermarkets that are not expired or harmful to human health are placed in a social supermarket. A social supermarket aims at selling food products from supermarkets at a discounted price. The businessfocuses on low-income households that cannot afford high priced foodstuffs. It also is a project to reduce the misuse of food products.
The following are the functional areas of the business:

Management: Management is the process by which company goals are set and achieved. Managers guide the employees in a company into the achievement of company goals by developing the strategies required to achieve those goals. The production also encompasses a significant function of the business. Production is the utilizing of resources to provide goods and services. In a social supermarket, the acquiring of foodstuffs from the major supermarkets is an essential process of the business. The manager of the social supermarket is in charge of purchasing the foods and also ensuring that the foods are still fit for human consumption.

Marketing: it is the process of identifying a customer base by identifying existing gaps in the market and working towards bridging those gaps by providing the goods and services needed. Marketing is part of the process that enables a company to gain profits. Social supermarkets’ target customers are those low-income households who are unable to afford the high priced foods at larger convenience stores. In their marketing strategy they focus on the people who are of low-income families and are unable to acquire their food needs from the major supermarkets. Social supermarkets are however not profit-based organizations.

Finances encompass the core part of any business in terms of capital, resources, profits, investments, among others. Financial management can be defined as organizing, Planning, and allocation of financial services. This area is a significant determinant of the company’s progressive state. If there is lack of financial management the company cannot survive. This is because the company requires to acquire raw materials needed for the production process,
including human labor. All of which cannot be achieved unless financial management is adhered to. (Karen 2012). Social supermarkets operate on a strict financial budget. This is because they are businesses that are set up to prevent the wasting of food while still supporting those citizens that are from a low income household.

Businesses are however, not only influenced by internal factors only, the external factors that influence the government include Government, which enforces the laws and legislation that govern businesses and include competition laws and quality of production laws. A company is required by default to meet all the set standards for the goods they provide. Consumer trends are also among factors influencing production process in a company. As time goes by, the needs of the customer, and the quality of services and goods they need changes. Companies that can keep their production process at par with the current customer trends benefit the most from the market base.

The Core Legal Requirements

Business name: in order to start operating any business in the country, it is mandatory for the entrepreneur to first submit a name for the business and its structure. According to MBA partners (2018), you are required to submit the name of the business you are supposed to operate. It can be a DBA referred to as doing Business as or it can be in form of an FBN a Fictitious Business Name. Lack of registration of a business name leads to the name of the business being the same as your name as far as the legal requirement goes. The only exception of a DBA is when your business is under sole ownership. When planning the business structure, either an LLC form or a corporation, the business name automatically registers with the state. When forming a limitedcompany, one is required to register a unique name, one that is not already being used. A name that is illegal or offensive is also not allowed.

Company bylaws: Most of the states require that the present business bylaws that will govern the company. They are not required to be written down and are not very important in terms of legal requirements but are essential in the operating of the company acting as a guiding principle to the employees of what is expected. They also aid in solving disputes that may arise between managing and directing in the company.

Trademarks, copyright, And Patents: a trademarks are used in the identification of a product the business produces for the customer. They are also used to protect the company from other people who will use the company’s trademark. Copyrights are used to protect business ideas and products without seeking permission from the business. Unlike patents that have to be applied, copyrights are automatic. Once the business begins to operate, no business should use your trademarks without permission.

Market Specific Legislation

Market Legislation can be described as those laws that govern the production of goods, their buying, and selling on the market, and advertising to the customers. Generally it is the laws that regulate how the consumer and the business interact in the market in terms of the goods sold by the supermarket for consuming by humans. The market is a center for different goods and services, and different laws govern different markets.

Legislation in the Food Market

In the food market the law states that the food products provided be safe for consumption. The company should ensure food is well presented and should ensure they have an avenue for recalling all unsafe food products in the market. The safety rules state that any food that is harmful to health and is unfit for human consumption should not be placed in the market. In Traceability, the government requires that all businesses in food Production Company keep a record of all Food, food substances, animals used in production of food, and a list of where their food products have been supplied. It is also required that all food that is not compliant with the food regulations be either recalled or withdrawn. Recalling is where the consumers are asked to destroy or return the goods while withdrawing is removal from the market before the food reaches the consumer.

Financial Requirements of The Business and Owner

Financial requirements are the total amount of money that is required to run a business. In a social supermarket the financial requirements include the money required to purchase foods from larger supermarkets, the transport fee from the supermarket location to the social supermarket location. Other resources required in the business include the storage facilities for the foods. All products made from milk including milk, for example, need cold temperatures to ensure they do not become unfit for human consumption over a short period and therefore there is need for refrigerators for storage of these foodstuffs.

There is also a need for shelves where the foodstuffs will be placed, a computer, cashier desk and chair, and other office equipment needed for the efficient offering of services to thecustomers. The UK government has aided in the funding of social supermarkets since they offer a sustainable solution for food wastage and cater to the low-income populations in the UK who are unable to afford food. They acquire the food that may have otherwise been disposed of by the major supermarkets for reasons such as overproduction, lack of proper weighing, and the way items are packaged and sell them at a highly discounted price.

The social supermarkets can apply for the “Social Supermarket Fund” from the mayor High street fund to help cater for the less fortunate citizens who struggle daily to get the minimum basic. The project also helps to save on food wastage by selling food still suitable for consumption by human beings that may have been otherwise discarded by more substantial stores, a project that is known as the FoodSave and was funded by the European Regional Development Fund, The London Waste and Recycling Board and The London mayor. (London Authority, 2015).

Tax requirements, Relevant Forms and Timescales

In the UK, social enterprises account for 5% of the total businesses that have employees and generate an estimate of 1% of the total GDP. (Buzzacott, 2011). When taxing social enterprises, they enjoy several benefits such as tax exemption and tax reduction. In an aim to encourage investors to invest in community benefiting projects their investment to such organization are exempt from tax a scheme known as the Community Investment Tax Relief. This relief is offered to both individuals and companies investing in such enterprises.

As a business, social enterprises are required, like any other business to pay Value Added Tax VAT on all their supplies. Some social enterprises, however, offering specific services canbe exempt from the VAT, such activities include offering training in vocational; skills, and sports services to individuals among others. Social supermarkets, however, are not exempt from the Value Added tax payment. The standard rate of the VAT rates in UK currently stand at 20%

Corporation Tax

Social enterprises are treated as a limited company and are therefore required to pay corporate taxes. These taxes depend on the amount of money the enterprise makes in terms of profit. The corporate taxes in the UK range from 20 to 21% of the profit made depending on the business. This tax is payable nine months and one day after the completion of the accounting year. (Shaziya, 2019).

Grant Tax

Grant is financial aid that is given to a company or enterprise to support the business. Grants are classified into two kinds, Revenue Grants and Capital Grants. Any amount of money lent to a business either by the government or an individual institution is taxable.

Recommendations For Business to Maximize Efficiency

Social enterprises are set for the sole purpose of helping communities that are at a disadvantage in terms of income. In an aim to succeed in the social enterprise venture, one will need to adhere to both social goals and the stiff constraints in terms of finances. Social supermarkets deal exclusively with foodstuffs, in an aim to adhere to social goals they require to provide foodstuffs that are fit for human consumption. However, food is not only basic needs.

Clothing, shelter, and education are also included in the basic needs. To reduce the financial burden on families that are not financially well off, the social supermarket can extend its services to more than just-food. Include footwear, clothing, and stationery to the products they sell.

Partnering with Nongovernmental organizations: as a social enterprise, financial constraints are a constant challenge in the social supermarket setting. Nongovernmental organizations, especially those involved with humanitarian aid can be an essential source of funding and solving of financial constraints that will be encountered in the business. World Vision, for example, deals with eradication of poverty. Partnering with such an organization in the provision of basic amenities to people who are financially incapable can be a sure way to maximize the efficiency of social supermarkets.


Social supermarkets aim not only to save on food wastage but also to provide food security for people that are unable to cater to their food needs due to poverty. In an attempt to save on food wastage the government of the United Kingdom funded the FoodSave program. They also created a “social Supermarket” fund where social supermarkets can apply for funding from the government. Like any business, the social supermarket needs capital to start the business and has financial requirements.

For a company making little profit, it can be hard for investors to place their money in the business. Thus, the government seeing it as a good project chose to support it. Social supermarkets however only focus solely on Foodstuffs, in a bid to become more successful in their business and help the low-income families more they can expand their services to otherproducts such as books and stationery for the children going to school. They can also include clothing and footwear to prevent also on the disposal of the second-hand clothes and shoes which would have been disposed to the environment.

This can help reduce the waste load on the environment while also seeking to help citizens with financial instability cater to their basic needs.


Buzzacott (2011) Social Enterprise- From a tax perspective.

Greater London Authority (2015). New Funding for ‘Social Supermarkets’ Reducing Food Poverty and Waste. London

Karen Collins (2012) An Introduction to Business.

MBO Partners (2018). How to Start a Business: 5 Legal Requirements Nelly Akalp (2014) The 10 Key Legal Documents for Your Business Sally/ R. Rodger L. (2015) Two Keys to Sustainable Social Enterprise. Shaziya Somnji (2018). Taxes Explained for Social Enterprises.


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