Introduction
While there are many forms of business as far as the law is concerned, all types of organizations have un9ique advantages and demerits. Apparently, the advantages and disadvantages are rooted in the legal capacity of a business. The common types of businesses available are sole proprietorship, corporation, Limited Liability Company, partnerships and the unlimited liability companies. Fundamentally the primary differences among all these forms are rooted in the liability status of the business in relation to the owners and providers of long-term finance (Emerson, 2009). Notably, unlimited liability means that the liabilities of the owners are limited to the extent of their contributions to the business. On the contrary, the liability of the people in an unlimited liability business such as the sole proprietorship form of business is in such a way that claimants can extend their claim to the private property of the owners. In straightforward terms, the business and the owner are inseparable. A limited company is a separate entity in the sense that it can take legal action and be sued; it can own property, enter into contracts in its own name and so on. This paper endeavors to describe the nature of sole proprietor business in the context of a hypothetical unisex salon.
The business I would like to establish is a small unisex salon within the municipality. The unisex salon will majorly concern itself with such things as dressing the hair of both female and male clients according to the desires of the customers. In addition to such hairdressing services, the salon will offer beauty services such as manicure and pedicure. The charges for such extra beauty services will be handled separately. Depending on the unique style required, the charges may be subjected to a discount. Fundamentally, I will fund the business out of personal savings, and run it on my own. In essence therefore, I will be the manager and the owner. Apparently a business that combines control and ownership in one individual is referred to as a sole proprietorship (Piper, 2007). Mine will be a sole proprietorship, registered under my name, such that I will be in a position to represent my interest in such things as litigation in my own name. In other words, I will be subject to unlimited liability in such a way that creditors can claim my personal possessions in the event that the private firm cannot meet its short term pecuniary compulsions as and when they fall due.
Justification of the choice
Worth noting is the fact that a sole proprietorship, unlike other forms of business, has more advantages than demerits. Among the major reasons behind my choice of the sole proprietorship for my unisex salon is the fact that in such an arrangement, I will be in a better position to take pleasure in profits alone. Having to share profits can be particularly demoralizing such that an individual loses the will to work (Emerson, 2009). Secondly, in a sole proprietorship business, I will be the person in control of the process. This is to say that I will not have to work under undue stress as I will be the person deciding what time to report to work and what time to leave the premises. Enjoying such control can only be achieved in a sole proprietorship. The third primary factor behind my choice of the sole proprietorship is the fact that taxation will be administered once as the business will be in my name. As mentioned earlier, there is no precise difference between a sole business and the owner. The number of formalities as far as the law is concerned is minimal in a sole proprietor business. Additionally, the overall cost of setting up a sole proprietorship is lower compared to the procedural costly process of incorporating a company.
Potential tort risks that come up in the business environment
Much like all other socio-economic institutions, the business setting is governed by the legal structures in such a style that the relationships between the clients and the operators of the business are affected and determined by civil law. The civil law is a subdivision of common law. Such civil law is concerned with the conflicts among individuals and other private entities. Under civil law, a wrong is referred to as a tort. In the context of business, like the unisex salon I am planning to set up, the common torts include such things as strict liability and negligence. Negligence is said to have occurred where one party fails to act in the aptitude of a sensible person (Khatta, 2008). Failure to act in the capacity of an average reasonable person may cause breach of duty of care. In the salon business, for example, it would be termed as negligence, where the service offering party carelessly forgets a pin in the client’s hair, causing unforeseen injuries. Similarly, strict liability may be common in such a business as a salon since strict liability entails the mere exposure of an individual to a hazardous object. For instance, if, in my salon, electricity wires are left unattended, they may cause electrocution on the client. Such a business owner can be sued for negligence. Such risks are referred to as tort risks because handling the consequences may cause a business to suffer serious losses.
Applying the risk management process to mitigate business risk
Business risk has been descried variously as the likelihood of a business performing poorly or even failing in extreme cases, following inefficiency of factors inherent of business process and structures. Apparently, weaknesses in the business processes and structures may cause the failure of a business to withstand such things as competition (Khatta, 2008). The risk management process will be applied in the mitigation of such risks. The process will first seek to identify the risk which is most likely to cause problems in the business. The identified risk will be measured by whatever parameters the management may deem relevant. Measuring risk is as well referred to as risk analysis. After the evaluation of the risks, the management, or I in the case of my unisex salon will endeavor to control the risk through mitigating the chances of further spread of the same. Having clearly assessed the risk, I will have the risk transferred t0o some other party as a way of reducing probability of loss. I will then review the post transfer status of the risk in relation to the business.
Types of tortscivil wrongs can be broadly categorized into four classes. The categories are formed on principle commonalities in some wrongs. The four categories of tort are described below.
Intentional torts
An intentional civil wrong is any act that is committed or omitted by a party willingly so as to have the other party injured. For an act to be considered an intentional tort there must have been malicious intent, followed by injury to another party.
Negligence torts
Torts under negligence are acts that are of such nature that they arise as a result of failure on the part of one party to fulfill its duty of care. Duty of care is described as the decision or conduct that would be expected of a rational man.
Strict liability torts
These are those civil wrongs that arise as a result of a party or individual exposing another individual; to a potentially dangerous object, which causes actual injury to the exposed party.
Nuisance torts
This is a common civil wrong that is concerned with the intentional or unintended act of an individual which causes uncalled for interference to other people’s comfort and enjoyment of privacy.
Worth noting is the fact that a legal counsel can be involved in cases where the conflict between the business and another party cannot be solved without due litigation (Emerson, 2009). Matters concerning deeply technical jargon and circumstances would as well call for the services of a legal counsel. Worth noting is the fact that in the contemporary business world, businesses have resorted to non-litigation methods of conflict resolution as litigation is quite costly.
Conclusion
In conclusion, it is clear to see that businesses vary in as far as legal personality is concerned. Some businesses, especially the limited liability companies and corporations are legal persons. On the contrary, such businesses as the sole proprietorship businesses are inseparable from their owners. Among the key merits of a sole proprietorship business are such things as independence, friendly tax practices, control, few formalities, low costs, and autonomy in enjoying profits. Some of the torts that may cause problems in sole proprietorship business are such torts as strict liability, negligence, intentional torts, and nuisance. These may call for the services of a legal counsel. However, the legal counsel should only be consulted, where the conflict cannot be solved amicably.
References
Emerson, R. W. (2009). Business law. Hauppauge, N.Y: Barron's Educational Series.
Khatta, R. S. (2008). Risk management. New Delhi: Global India Publications.
Piper, M. (2007). Surprisingly simple: Independent contractor, sole proprietor, and LLC taxes explained in 100 pages or less. Chicago, Ill: Mike Piper.
