Archived: Starting A Business? What Type of Business Entity Should You Use

Her extended family included a hefty number of infants and toddlers, and though young, Roberta was older than most of them and grew up teaching, coddling and nurturing an array of kids, all the while dreaming of the day when she could earn a livelihood doing what she loved to do every day.

As she reached age 20 Roberta had lost her mother and her father’s health was failing, so Roberta worked several low level jobs to help support the household, sporadically taking classes in early child development and child psychology at the local community college. Roberta loved her classes but despised the jobs that required her to wait tables and clean hotel rooms under the watchful eyes of authoritarian employers. She dreamed of the day, that day, when she would be her own boss and be free.

That day came in a sad way. Roberta’s father passed and after the mourning and burial, Big Marty, the family lawyer, informed her that she owned the family house free and clear and was entitled to $57,000.00 from her father’s retirement account. All tolled this was more wealth than Roberta had ever touched or imagined and family and friends encouraged her to take advantage of the windfall to follow her heart. “Open up a child care facility,” they counseled energetically.

And so Roberta pursued her dream. She completed the classes necessary to earn the required certification and then, lacking any business education she consulted the family sage, her Aunt Millicent.

“I have the certification, I’ve found a nice little building suitable for a school, but I need to open some type of business to get started.”
“You can be a sole proprietor,” Aunt Millicent said. “That means you are the owner and the boss.”

Owner, boss, those words resonated with Roberta and she smiled at the thought that she could order the day in her own way and could direct people around in the manner she had suffered while working the menial jobs from which she had escaped.

Roberta Smith opened “Roberta’s Child Care Center.”

Although she hired and trained some high school graduates to help her out in the business, Roberta tried to be the eyes and ears everywhere every day and in that endeavor she eventually failed. An unobserved incident occurred between two children in the little play yard and one of the children, Lilly, suffered a serious injury to her right eye. Lilly’s parents hired a lawyer who sued Roberta for Lilly’s enormous medical bills and for lilly’s commensurate pain and suffering. The lawyer also demanded millions in punitive damages on the theory that the lack of yard supervision was a wanton and reckless disregard for the safety of the young children in Roberta’s care.

This blog post was archived on March 24, 2017 and is only available for Enterprise clients