First I would like the mention that there is no one “best” form of ownership. All companies start small, but as to whether you want to start it yourself or with partners is your choice of course. To find out what type ownership suits you, there are a couple of factors one must consider before making a choice. The main factors I would definitely consider are:

How much capital is needed to start up the company?

How big can this business become later on?

Who would be liable for the debts if the business fails?

These are just some of the factor an entrepreneur must consider.

As I mentioned before, when starting up a business, would you consider starting up yourself(Sole Proprietorship) meaning you own the whole business yourself, or would you consider starting up with business partners(Partnership). This is very important choice, as there are advantages and disadvantages to both types or ownerships.

Sole Proprietorship(Advantages)

• Terminated at anytime.
• Keeps all profits.
• Has right to make all decisions.
• Least amount of regulations in owning a business.

Sole Proprietorship(Disadvantages)

• Take on all liability.
• Requires license.
• Due to there no difference between the owners personal and business debts, creditors can sue to collect personal assets.
• Limited skill set, if owner does not have required skills to make business succeed.

Partnership(Advantages)

• Easy to establish.
• Not limited to one persons skill set.
• More capital to invest.
• Attract limited partners to join in on the business.
• Taxes gets divided between the partners.

Partnership(Disadvantages)

• Unlimited liability
• If one of the partners dies, not transferrable through inheritance.
• Partnership requires more than one owner. There maybe conflicts between the two owners.

Compared to Sole Proprietorship and Partnerships, a corporation is a separate legal entity and may do business, issue contracts, sue and be sued, and pay taxes. A corporation can be formed by simply filing an application for a charter with the respective state. By filing this application, the incorporator will put on record facts, such as:

• the purpose of the intended corporation,
• the names and addresses of the incorporators,
• the amount and types of capital stock the corporation will be authorized to issue, and
• the rights and privileges of the holders of each class of stock.

The Main difference between S-Corporation and a Limited Liability Company are how they fill taxes differently. The S-Corp would have to file a business tax return, as where a LLC only files the business tax return if there are more than one owner.