| Course | BU 106 Introduction to Business |
|---|---|
| Unit | Unit 2 |
| Paper type | Forms of ownership paper |
| Length | About 980 words, 6 pages |
| Format | APA 7 student paper |
| School | Herzing University |
| Program | BS in Business Management |
| Updated | October 2026 |
Free sample paper for BU 106 Unit 2
Three Owners, Two Drones and One Roof Collapse Away From Losing a House: Choosing a Form of Ownership for a Drone Inspection Business
Student Name
Business, Herzing University
BU 106: Introduction to Business
Instructor Name
January 22, 2026
Three Owners, Two Drones and One Roof Collapse Away From Losing a House: Choosing a Form of Ownership for a Drone Inspection Business
The Venture
SkyCheck Inspections is a composite startup planned by three friends in Indiana. It will use drones to photograph roofs, gutters and solar panels for insurance adjusters, roofing contractors and homeowners, replacing the ladder climb that inspections usually require. Each owner will fly; federal rules require anyone flying a drone commercially to hold a remote pilot certificate (14 C.F.R. § 107.12), and all three have passed the test. Starting the business will take about $38,000: two commercial drones with thermal cameras, a laptop and software, a used van, and the first year of liability insurance. The owners can put in $18,000 among them and plan to borrow the other $20,000 through an equipment loan. If the business grows, they expect to seek an outside investor within three years to fund more pilots and drones in other cities.
The Four Structures, Asked the Same Three Questions
Sole proprietorship. Liability: the owner is personally liable for all business debts and claims. Taxation: profit is reported on the owner's personal tax return and subject to income tax and self-employment tax. Setup and upkeep: nothing to file beyond local licenses. This structure does not fit SkyCheck at all, because a sole proprietorship has one owner and SkyCheck has three.
General partnership. Liability: each partner is personally liable for all business debts, including those created by another partner. Taxation: the partnership files an information return, and each partner reports a share of profit on a personal return, paying income and self-employment tax; the business itself pays no income tax. Setup and upkeep: a partnership exists as soon as two or more people run a business together for profit, even without paperwork, though a written agreement is strongly advised.
Limited liability company. Liability: the company, not its members, answers for its debts and for claims against it, beyond what they invested, although they remain liable for their own negligence, such as crashing a drone they were flying. Taxation: by default, a company with several members is taxed like a partnership, with profit passing through to the members; the members may choose corporate tax treatment by filing an election. Setup and upkeep: articles of organization filed with the state, a modest filing fee, a periodic state report, and an operating agreement among the members.
Corporation. Liability: shareholders are generally not personally liable beyond their investment. Taxation: a regular corporation pays federal income tax on its profit at a flat 21% rate (26 U.S.C. § 11), and shareholders pay tax again on dividends; a corporation that qualifies and elects S status passes profit through to shareholders instead, but it is limited to 100 shareholders, one class of stock and certain eligible owners, as 26 U.S.C. § 1361 defines. Setup and upkeep: articles of incorporation, bylaws, a board of directors, annual meetings and minutes, and more formal recordkeeping.
Side by Side
The same answers, in a table.
| Structure | Who is liable for business debts and claims | How profit is taxed | What it takes to set up and keep running | Fits three owners? |
|---|---|---|---|---|
| Sole proprietorship | The owner, personally, without limit | Owner's personal return; self-employment tax | Almost nothing | No |
| General partnership | Each partner, personally, without limit, including for other partners' acts | Passes through to partners; self-employment tax | Can form without filing; written agreement advised | Yes |
| Limited liability company | The company; members protected beyond their investment, except for their own negligence | Passes through by default; can elect corporate taxation | State filing, operating agreement, periodic report | Yes |
| Corporation | The corporation; shareholders protected beyond their investment | Regular corporation taxed at 21%, then dividends taxed again; S corporation passes through with owner limits | State filing, bylaws, board, meetings, minutes | Yes |
Recommendation: A Limited Liability Company
SkyCheck should form a limited liability company. The deciding feature is the risk of the work. A drone that falls onto a car, a client's roof damaged during an inspection, or a wrong report that leads an insurer to deny a claim could produce a lawsuit larger than the business's insurance. In a general partnership, each owner's house and savings would be exposed not only to their own mistakes but to the other two partners' flights. An LLC keeps the business's debts and most claims with the business, so one owner's crash does not put the other two owners' personal assets at risk, although each remains responsible for their own negligence and must still carry insurance.
The LLC also fits the money. With profits expected to be small at first, pass-through taxation avoids paying tax twice. The operating agreement can set out how the three owners share profits, who decides what, and what happens if one wants to leave, which is exactly the kind of dispute that ends friendships in informal partnerships. The course text describes the LLC as combining limited liability with the tax treatment of a partnership (Gitman et al., 2018), which is the combination SkyCheck needs now.
When the Choice Should Be Revisited
Two developments would reopen the question. If the business becomes profitable enough that the owners pay themselves steady salaries, electing S corporation tax treatment for the LLC could reduce self-employment taxes, and an accountant should compare the two each year. And if SkyCheck seeks the outside investor it expects in three years, many investors prefer to buy shares in a corporation, with a board and a clear class of stock. At that point converting to a corporation may be worth the added formality. For now, the LLC gives the three owners the protection they most need at the lowest cost to set up and run.
What the Owners Must Still Do After Forming
Forming an LLC does not protect the owners automatically in every situation, so the owners need to know what keeps that protection in place. First, the business must keep its money separate: a business bank account, business credit, and no paying personal bills from company funds. Courts can disregard the company and reach the owners' assets when owners treat the business's money as their own. Second, contracts and invoices should be signed in the company's name, with the owner's title, so that clients deal with the company rather than with an individual. Third, the company should carry commercial drone liability insurance and hull coverage, because the LLC limits who pays a judgment but does not make a judgment smaller, and an uninsured claim could still end the business. Fourth, the operating agreement should be signed before the first flight, not after the first disagreement. These steps cost little, and together they are what make the recommendation work in practice.
References
Gitman, L. J., McDaniel, C., Shah, A., Reece, M., Koffel, L., Talsma, B., & Hyatt, J. C. (2018). Introduction to business. OpenStax. https://openstax.org/details/books/introduction-business
Remote pilot certification required, 14 C.F.R. § 107.12 (2025).
S corporation defined, 26 U.S.C. § 1361 (2025).
Tax imposed, 26 U.S.C. § 11 (2025).
What the BU 106 Unit 2 instructions ask for
Unit 2 asks you to recommend a form of ownership for a business. Expect to describe the venture, compare the main structures on the same questions, summarize them in a table, recommend one with reasons, say when to revisit the choice and explain what the owners must do afterward. Students often ask which questions to use. Liability, taxation and control are the core three; add ease of raising money if it matters. Ask every structure the same questions, so the comparison is fair. Tie the recommendation to the venture's actual risks. Cite tax and regulatory sources where they apply. Explain that protection depends on keeping business and personal money separate.
Inside the BU 106 Unit 2 example
The paper opens with SkyCheck's services, customers, owners and the FAA remote pilot certificate each pilot needs. The comparison section takes each structure in turn and answers the three questions. A table repeats the answers in one view. The recommendation section explains that personal liability is the deciding issue, since accidents and errors could reach the owners' homes under a partnership. The revisit section notes that S corporation election could reduce self-employment tax once owners take steady salaries, and that outside investors might require a corporation. The final section lists steps to keep protection, such as a separate bank account, an operating agreement, insurance and signing contracts in the company's name.
BU 106 Unit 2 rubric: what full points look like
Herzing's rubric for a forms of ownership paper typically covers the venture, the comparison, the table, the recommendation, future changes and owner obligations. A recommendation tied to the venture's specific risks gets the most weight, because the course wants students to choose a structure for a reason rather than repeat textbook definitions. Venture points reward details that affect liability and taxes. Comparison criteria look for the same questions asked of every structure. Table credit goes to accurate, consistent answers. Revisit points reward conditions that would change the choice. Obligation points reward steps that keep liability protection. Gitman's Introduction to Business text, the FAA remote pilot rule and the federal tax code sections on corporations support the paper.
BU 106 Unit 2 help before you submit
Ownership papers in BU 106 Unit 2 commonly lose points by defining each structure without applying it to the venture. Another frequent problem is asking different questions of different structures. Students often recommend an LLC without explaining the risk it addresses. Taxation is described vaguely. Insurance is ignored, though it matters as much as structure. The paper never says when the choice should change. Owner obligations after forming are missing. Regulatory requirements for the business are left out, such as the pilot certificate drone operators need, which affects who can fly and how the owners divide work. Finally, connect the choice to what could go wrong, because graders reward a recommendation that would protect real owners from real risks.
Get a BU 106 Unit 2 example written to your instructions
Forward the Unit 2 instructions and the BU 106 rubric from your classroom, with the venture description if the assignment supplies one. We write a custom example that fixes the business first, asks the same questions of all four structures, tables the answers and recommends one with its cost named. First custom sample free, returned in 24 to 48 hours.
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BU 106 Unit 2 questions, answered
Do I have to cover all four structures?
Follow the instructions, which in many sections name the forms to be treated and occasionally add a limited partnership or an S corporation election. Where the choice is open, four is a workable number: two unincorporated and two carrying limited liability, so the comparison has something to turn on. Adding a fifth rarely earns anything and usually thins the treatment of the others.
Where do the legal details come from?
From your course materials and from state resources the assignment points you toward. Formation requirements, filing fees and annual obligations are set by each state, so a paper stating them as national facts will be wrong somewhere. Name the state your venture would operate in and describe what a document filed there contains. Class work describes; it does not advise anybody about a real filing.
Can the venture be one I am planning myself?
Usually yes, and it often makes the paper sharper because the owner count and the starting costs are real to you. Keep to what you would be willing to have read by a class. Nothing belonging to a current employer, no client names and no figures out of somebody else's books, and where any of that would be needed, build the venture as a composite and say so.
Where can I find a free BU 106 Unit 2 sample paper?
Read the complete BU 106 Unit 2 forms of ownership paper here at no charge, a drone inspection startup compared across four structures with an LLC recommended. Ask for a custom paper for another business.
Which form of business ownership limits personal liability?
Corporations and limited liability companies generally protect owners' personal assets from business debts and claims, as long as business and personal finances are kept separate. This sample recommends an LLC.