LEGAL UNDERPINNING2 There are five different compositions or forms of business by which companies can be established. They are sole proprietorship, general partnerships, limited partnerships, limited liabilities corporations, and incorporated corporations.Each form entails the business position on how much liability that they are responsible for, the amount of revenue that can be generated and saved by being under the form which will suit the amount of risk that the company should take on. Within this paper similarities will be shown between each form and the comparison will demonstrate how each company can reduce the amount of liability exposure through each business form. Business Matrix Compare and Contrast your personal liability exposure Amount of Liability Exposure as OwnerLiability limiting factors Tinker’s HomeSecurity ServiceSoleProprietorshipUnder the sole proprietorship business form the owner is responsible for all liabilities. Since the owner is responsible; his/her assets can be seized under this formation to pay for any legal acquired damages. Also any income earned under this business formation, are taxed just like regular income tax. Nelson (2008) stated “According to the 2001 National Research Program (NRP), sole proprietorships are the biggest single contributor to the tax gap.4 The NRP reported that nonfarm proprietors contributed $68 billion to the $197 billion individual income tax underreporting gap in 2001” (pg. 422-423).
