| Business | Type of Business | Liability protection |
| Tinker’s Home Security Services | Sole proprietorship | The owner is fully liable for the company’s liabilities. |
| Tinker and Tailor Home Security Services | General partnership | Both owners have unlimited liability and are fully liable for the business debts. |
| Tinker and Tailor Home Security Services | Limited Partnership | Liable only to the extent of the individual investment in the business. |
| Tinker and Tailor Home Security Services Inc. | Corporation | The individual has no liability for business debt beyond what they have invested in the business |
| Tinker and Tailor Home Security Services LLC | Limited Liability Company | The individual has no liability for business debt beyond what they have invested in the business |
Ways of Reducing Liability And Exposure Of Owner
Tinker’s Home Security Services
This type of business is a sole proprietorship. In a sole proprietorship, the owner of the business and the business itself are the same. The business owner is fully liable for the debts of the business as well as other liabilities that the business may incur. Therefore, the liability of the owner in this type of business is not limited. In the event the business cannot pay its debts and liabilities incurred, personal properties of the owner can be sold to pay such debts accruing to the business ( Miller, 2012) . Therefore, this type of business greatly exposes the owner to liability under the law.
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Several measures can protect the owner of this business from business liability and hence prevent him from being exposed to such liability. First, an insurance cover is effective in offering such protection. Concerning insurance, the owner of the business shifts any possible liability that the business may incur to an insurance firm. The owner of the business then pays a premium for an insurance cover. In case of a liability requiring the business to pay a debt beyond what the business can afford, the insurance company steps in to pay such debts ( Schneeman, 2012) . This way, the insurance company shields the proprietor against the liabilities of his business.
Secondly, home protection of the sole proprietor is tact in limiting liability. This could be done by registering assets in homes under the ownership of two people like a spouse or any other family member ( Miller, & Hollowell, 2018) . In such cases, the business debts cannot be recovered through the sale of such properties since the owner equity is shared with another individual who is not a party to the business. This way, the personal property of the owner is protected, and hence liability is limited largely.
The use of independent contractors could be another significant avenue to minimize liability and protect owner in a sole proprietorship. Under the American legal jurisdiction, a business cannot be held liable for loss caused by the negligence of an independent contractor ( Kwall, 2015) . Therefore, hiring independent contractors in sole proprietorship businesses shifts the liability from the owner of the business to the independent contractor and therefore shields the sole proprietor against loss occasioned by the independent proprietor.
Lastly, the sole proprietor in this business can be shielded from liability by upgrading the business into Limited Liability Company. In this type of business, the liability is limited to the owners’ equity in the business. Consequently, this upgrading this business into a limited liability company will be effective in protecting the owner from any liability associated with a sole proprietorship.
Tinker and Tailor Home Security Services General partnership
This is a general partnership type of business where one or more partners have limited liability. Therefore, the business owner can be protected by ensuring that they are limited liability partners. This way, they cannot suffer liability beyond what they have invested in the business. Secondly, the owners could cover their owner equity and hence transfer such liability affecting their shareholding in the business to an insurance company ( Miller, & Hollowell, 2018) . The two ways are effective in protecting owners against liability in general partnerships.
Tinker And Tailor Home Security Services Limited Liability Partnership
In such a partnership, the liability of the business is limited to the assets of the business. Therefore, the owners of this business are largely protected by law from losing their personal properties in lawsuits that relate to the debts and liabilities incurred by the business ( Kwall, 2015) .
Tinker and Tailor Home Security Services Corporations
This type of business is a corporation. The law recognizes a corporation as an independent and complete legal entity. Therefore, a corporation can enter into legally binding agreements or even borrow loans. The liability of owners of a corporation type of business has limited liability ( Miller, 2012) . Therefore, by being a shareholder in such a corporation, one is protected against any liability of the business that may go beyond the assets of the business.
Personal Business
The business that I intend to own in future is public transport business. I intend to operate a business that will offer transport service. My preferred model of this business will be a public corporation. I will seek other business people and entities interested in this type of business and partner with them in the formation of a corporation.
I would prefer to run this business as a corporation for various reasons. First, a corporation brings together different people with different experiences and Ideas that are important in building the business ( Schneeman, 2012) . The knowledge and experiences of each shareholder have great value in contributing to the growth of the business. Secondly, the liability of shareholders in this type of business is limited ( Miller, & Hollowell, 2018) . By venturing into this type of business, I will be greatly protected against any liability that the business may incur and may be unable to pay. My personal property will not be sold to pay for the liabilities that the business has encountered. As a shareholder in this business, I will be highly protected from any liability.
Furthermore, my preference in this model of business is because many people can bring together huge resources for the business. Consequently, this model will enable the generation the generation of a high capital base for the business ( Kwall, 2015) . The capital of the business determines its success or failure. Therefore, the sufficient capital raised through this model will be necessary for promoting the business.
Lastly, the management of a corporation is highly effective. In most cases, the corporation brings together people with different expertise and experience in management. Moreover, the high capital base in this model of business makes it possible to hire highly qualified staff in management positions ( Miller, & Hollowell, 2018) . As such, the efficiency and ease of management in public corporation is enhanced.
The only drawback in this model of business is the possibility of double taxation. While the profit generated by the business will be taxed, the revenue paid to the shareholders as profit is equally taxed under the income tax model. This results to double taxation ( Schneeman, 2012) . However, the prospects of higher returns in corporations overshadow the loss that one may suffer because of double taxation.
References
Kwall, J. L., (2015). The federal income taxation of corporations, partnerships, limited liability companies and their owners, part one . University Casebook Series, Foundation Press, 2015. Available at SSRN: https://ssrn.com/abstract=2686287
Miller, R. L. (2012). Cengage advantage books: Fundamentals of business law: Summarized Cases . New York, NY: Cengage Learning.
Miller, R. L. & Hollowell W. E. (2018). Business law: Text & exercises. New York, NY: Cengage Learning
Schneeman, A. (2012). The law of corporations and other business organizations . New York, NY: Cengage Learning
