A sole proprietorship is a simple business structure that allows a person to conduct business as his or her self. Under this structure the owner and his or her company are viewed as one and the same. While this is an easy way to start doing business, it is important to be aware that a sole proprietorship does not protect the owner from any business liabilities.
A partnership is a simple business structure for businesses with more than one owner. There are two types of partnerships: general partnerships and limited partnerships. When considering this business structure, understand that owners maintain personal liability for the business. Owners with limited partnerships may face limited liability.
Forming a corporation establishes a business as a separate legal entity, providing owners with limited liability protection. There are two types of corporations: C-corporations and S-corporations. There are several key differences between these two types of corporations, including tax issues and shareholder restrictions.