Module 2 Discussion: Initial Post
A Contractor in Someone Else's Bathroom: Why SafeStep Should Be an LLC
For my fictitious business, SafeStep Home Modifications, which installs grab bars, rails, and ramps so older adults can stay at home, the choice of ownership form comes down to one question more than any other: what happens if something goes wrong in a customer's house?
The options each trade off liability, taxes, cost, and control. A sole proprietorship is the simplest and cheapest: the owner and the business are legally the same, and profits are reported on the owner's personal return. But the owner is personally responsible for the business's debts and legal obligations (U.S. Small Business Administration [SBA], n.d.). A general partnership adds a partner but keeps that personal exposure, now extended to each partner's actions. A corporation separates the business from its owners, protecting personal assets, but a C corporation's profits are taxed at the corporate level and again when paid out as dividends, and corporations carry more formal requirements for boards, meetings, and records (Nickels et al., 2022).
A limited liability company combines the protection of a corporation with simpler operation. Owners are generally not personally liable for the company's debts, and by default the IRS treats a single-member LLC as a disregarded entity whose income is reported on the owner's return, while an LLC with more than one member is taxed as a partnership unless it elects to be treated as a corporation (Internal Revenue Service, 2025). The costs are a state filing fee, an annual report in many states, and an operating agreement.
For SafeStep, liability decides it. The company's work involves drilling into walls near plumbing and wiring, installing bars that people will put their full weight on, and building ramps that must hold wheelchairs. If a grab bar pulls out of a wall two years later, the owner's house should not be what pays for it. An LLC limits that exposure to the business's assets, although the owner should still carry general liability insurance, because the LLC does not protect against the owner's own negligence and a lawsuit can still take everything the business owns. Taxes are a secondary reason: pass-through treatment avoids the double taxation of a C corporation while the company is small, and the owner can later elect S corporation tax treatment if profits grow enough to make payroll tax savings worthwhile.
I would choose a single-member LLC at startup, with an operating agreement that already describes how a second member, perhaps the occupational therapist who advises on assessments, could join. A question for classmates: for a business with physical risk to customers, do you think insurance alone would be enough protection, or is the LLC worth the extra paperwork?
References
Internal Revenue Service. (2025). Business structures. https://www.irs.gov/businesses/small-businesses-self-employed/business-structures
Nickels, W. G., McHugh, J. M., & McHugh, S. M. (2022). Understanding business (13th ed.). McGraw Hill.
U.S. Small Business Administration. (n.d.). Choose a business structure. https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
How this BUS 210 Module 2 example is structured
Aspen's catalog describes BUS 210 as covering organizational forms applied to real situations and a fictitious business. Aspen does not publish module deliverables, so check your classroom for the exact prompt. This example compares ownership forms on the standard criteria with sources, applies them to one business's risks, notes the limits of the chosen form and asks peers a question.
BUS 210 Module 2 questions, answered
What does the BUS 210 Module 2 discussion usually ask for?
Discussions in this part of BUS 210 often ask which form of business ownership fits a business idea and why. Aspen does not publish module deliverables, so your classroom's instructions govern.
How is a single-member LLC taxed?
By default the IRS treats it as a disregarded entity, so its income is reported on the owner's personal return; it can elect to be taxed as a corporation instead.
Does an LLC protect the owner from all liability?
No. It generally protects personal assets from the company's debts, but not from the owner's own negligence, which is why businesses with physical risk still carry liability insurance.
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