According to the Small Business Chronicle, A sole proprietorship is a business that has a single owner who is responsible for making decisions for the company. A partnership consists of two or more individuals who share the responsibility of running the company. A corporation is one of the most recognizable business structures and has a separate identity from the owners of the company. One or more owners may participate as shareholders of a corporation.
Have you thought about how you would like to proceed? Some businesses are perfect for a sole proprietorship. A Sole Proprietor makes all the decisions and pays for all income tax on their personal taxes. Business plans that include growth, especially at a fast rate may want to consider having a partner to help make decisions when you are unavailable. They generally also invest their personal funds and bring a great deal of knowledge to the table. Partners are also liable for income tax on their personal taxes.
Businesses are required to file articles of incorporation, also known as a certificate of formation, to legally form a corporation in any state. Corporations provide owners of the company with limited liability protection against business losses and obligations. This means owners of a corporation will not lose their home, if the company goes bankrupt. Owners of a corporation are liable for company debts and obligations up to the extent of their investment in the company.
Deep research and understanding are a must when going into business. Every decision you make from the very beginning may impact (a) how you do business (b) how fast your business will grow (c) who will be responsible for raising capital and paying off debt. Some businesses require hiring an attorney to help sort out the legal details.
When in doubt, always consult a professional.