| Course | MT207 Starting a Business |
|---|---|
| Unit | Unit 6 |
| Paper type | Legal structure memo |
| Length | About 810 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT207 Unit 6
Roofs, Lint and a Cousin's Van: A Unit 6 Legal Structure Memo for a Dryer Vent Cleaning Startup
[Student Name]
Purdue University Global
MT207: Starting a Business
Unit 6 Legal Structure Memo
[Instructor Name]
[Date]
Clearline Vent Care, its founder, her cousin and every figure are composite and illustrative; state fees are bracketed because they change; this memo is a course exercise, not legal or tax advice; the sources cited are real.
Memo
To: Tanya Brooks, Founder From: MT207 student consultant Date: November 4 Subject: Choice of legal structure for Clearline Vent Care
Purpose
This memo compares four structures and recommends one. Four tests apply, weighted for this venture: whether the founder's house and savings are shielded, which tax return the profit lands on, what it would take to bring in a second owner, and what each form costs to set up and keep.
The Four Options
A sole proprietorship requires nothing beyond a business license. Profit flows to the owner's personal return, and the owner is personally liable for every debt and claim. For a business that works on roofs and on equipment that can start a fire, that exposure is the decisive weakness.
A general partnership would arise if the founder accepted her cousin's offer: his nearly new cargo van in exchange for a share of the business. Partners share profit as they agree, but each is personally liable for the partnership's obligations, including those created by the other partner. Her cousin would also share control of decisions he has no experience making.
A single-member limited liability company separates the business's debts and most claims from the owner's personal assets, provided the owner keeps business and personal money apart and signs contracts in the company's name. By default the IRS disregards a single-member LLC as a separate entity for income tax, so profit is reported on the owner's personal return (Internal Revenue Service, 2024a). Washington charges a filing fee of about [$200] to form one and a smaller annual report fee.
An S corporation is a tax election rather than a separate form; an LLC or a corporation can elect it. An owner who also does the work draws a salary that has to be reasonable for the job, and only the profit left after that salary escapes self-employment tax (Internal Revenue Service, 2024b). The election adds payroll filings and a separate return.
Applying the Tests
On liability, the LLC and the S corporation protect personal assets; the sole proprietorship and partnership do not. The founder's house and savings are exactly what she told the Unit 1 board she feared losing, so this test eliminates the first two options. Insurance remains necessary, because an LLC does not protect an owner from her own negligence on a job, and a lender's personal guarantee will still reach her assets for that loan.
On taxation, the single-member LLC is simple: one schedule on her personal return. The S election saves self-employment tax only when profit comfortably exceeds a reasonable salary for the work. In year one the projected profit after the owner's draw is small, so the election would add filing costs without savings. Washington has no personal income tax, but the business will owe state business and occupation tax on gross receipts whatever form it takes.
On ownership, the cousin's offer is the real question. A van worth about [$22,000] in exchange for a share of every future year's profit is an expensive way to pay for a vehicle the business could finance for about [$341] a month. If she ever wants a partner, the LLC can admit a second member, which changes its tax treatment to a partnership but keeps liability protection.
On cost, the LLC costs a few hundred dollars to form and a small annual fee. Scarborough and Cornwall (2019) note that the LLC combines liability protection with flexible management and pass-through taxation, which is why many small service businesses choose it.
The LLC also helps with buyers. Several property managers in the Unit 3 calls said their companies require vendors to carry insurance and to contract as a business entity, not as an individual, so the form supports the sales plan as well as the owner's protection.
The cousin's van is not free; it costs a share of every year's profit for as long as the business lasts.
Recommendation
Form Clearline Vent Care as a single-member LLC in Washington before signing any apartment contract, open a separate business bank account the same week, and sign every contract and invoice in the company's name. Decline the cousin's partnership offer and finance a van instead. Revisit the S corporation election once annual profit after a reasonable salary reaches roughly [$40,000 to $50,000], which the Unit 10 projection suggests could happen in year three. Ask an accountant to confirm that threshold before electing.
References
Internal Revenue Service. (2024a). Single member limited liability companies. https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies
Internal Revenue Service. (2024b). S corporations. https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations
Scarborough, N. M., & Cornwall, J. R. (2019). Essentials of entrepreneurship and small business management (9th ed.). Pearson.
What the MT207 Unit 6 assignment asks for
The sixth unit commonly asks for a memo comparing legal structures for your venture and recommending one. Most prompts expect at least four options, usually the proprietorship, a partnership, an LLC and a corporation, sometimes with the S election added, compared on liability, taxation, ownership and management, and cost to form and maintain. The comparison should be applied to the venture's specific risks and plans rather than repeated from a textbook chart. State fees vary and change, so cite the state source or bracket the figures. Use IRS guidance for tax treatment. A clear recommendation should follow, with conditions for revisiting it as the business grows. The memo should say plainly that it is a coursework comparison rather than legal or tax advice. Two pages under a standard memo heading is the usual length, with APA 7 for the IRS and text sources, and a comparison table helps in your own version.
How the MT 207 Unit 6 example is put together
The memo opens with a heading block and a purpose sentence that lists the four tests in the order they matter here. Each option is described in a paragraph applied to this founder, including the cousin's van-for-a-stake offer, and a margin note marks that application. IRS guidance supports the default tax treatment of a single-member LLC and the salary rule under an S election. The tests are then applied one by one: liability eliminates the first two forms, though insurance and the loan guarantee still matter; taxation favors the simple LLC in year one; the cousin's offer is priced against a van payment of about $341 a month; and cost is modest. A paragraph links the form to buyers who require vendors to contract as businesses, with a second note. The highlighted line puts the true cost of the free van, and the recommendation sets a threshold for the S election.
MT207 Unit 6 rubric: what earns full points
Legal structure memos are generally graded on accuracy and application. Each form's liability and tax treatment must be stated correctly, with sources, since errors here cost points quickly. Graders reward memos that apply each test to the venture's facts, such as roof work, a possible partner or projected profit, instead of reproducing a chart. Ranking the tests by importance for this business shows judgment. The recommendation should follow from the tests and include the conditions under which it would change, because entity choice is rarely permanent. Practical steps, such as opening a separate bank account and signing contracts in the company's name, show understanding of how liability protection is kept. Memo format, a professional tone and a statement that the memo is not legal advice all count. The two IRS pages and Scarborough and Cornwall should appear in APA 7.
MT207 Unit 6 help from the desk
Entity memos often lose points by declaring that an LLC protects the owner from everything, including her own negligence and personal guarantees. Another frequent error is recommending an S corporation in year one without checking whether profit is high enough to justify the extra filings. Some memos describe each form without ever applying it to the venture. Others ignore state taxes or fees, which can differ sharply from federal treatment. Partnership offers from friends or relatives deserve real analysis, since they are often more expensive than they look. Watch for tax claims with no source. If your state has unusual rules, such as a gross receipts tax, mention them. Tell our writers the venture, the state and any ownership offers on the table, and they can help draft a memo that applies each test and recommends a form with clear conditions.
Get an MT207 Unit 6 example written to your instructions
Send the Unit 6 prompt, the rubric and the state of formation, plus anyone who might share ownership. The memo compares the forms your instructions list, applies each to the venture, and brackets the state figures for confirmation. Written as coursework analysis, the memo arrives in 24-48h, the first custom sample at no cost. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT207 Unit 6 questions, answered
Is the memo legal advice?
No. It is a coursework comparison of entity types applied to a stated venture, the kind the MT207 prompt asks students to produce. It explains how each form treats liability, taxation and ownership in general terms and brackets the state-specific figures. A founder forming a real company would confirm the details with the state filing office and a qualified professional before choosing.
Why not recommend an S corporation from the start?
Because the election adds payroll and filing work that pays off only once profit is high enough. In a first year where the owner draws little, the savings are small and the administrative cost is certain. The memo defers the election and names the profit level at which it would revisit, which most graders read as stronger reasoning than an immediate election.
Does the memo need to cite sources?
Yes, in most sections. The state's business filing site for formation fees and annual reports, IRS publications on how each entity is taxed, and the Small Business Administration's guidance on business structures are common. Each claim about a form's treatment is tied to one of them, and bracketed figures are labeled as state-dependent so the reader knows which facts travel.
Where can I find a free MT207 Unit 6 sample paper?
This page shows a complete MT207 Unit 6 legal structure memo for a Spokane vent cleaning business. It weighs four forms on liability, tax, ownership and cost, applies them to the founder's facts, recommends an LLC and includes margin notes.
Why does the memo turn down the cousin's van offer?
The van would cost a share of every future year's profit and shared control, while financing a van costs about $341 a month for four years. The memo treats the offer as an expensive way to buy a vehicle.