What's the Difference?
Posted by: Kelley
on Nov 17, 2009 
Many first time business owners have a hard time deciding whether or not to go it alone as a sole proprietor, to take on a partner or if they should incorporate.
Below you will find some useful tips to think about when making this important decision.
A Sole Proprietorship is the easiest out of the three to start up. The start up costs are low as a Sole Proprietor, and there are great tax advantages (write offs) to the owner. The only drawback is that there is no name protection as a Sole Proprietor and there is no protection/separation between you and your business (ie if your business is sued or the business loses money, then you are personally liable as well.
A Partnership is when two or more people decide to combine their skills and resources and go in to business together. Both parties involved are responsible for the overall management of a business, and each are personally liable for all debts with the business.
When entering in to a Partnership business, is important to outline the terms and conditions of your partnership in a legal agreement. In the agreement you will need to outline how you want to share the profits.
A Corporation is a legal entity that is separate and distinct from its owner(s). With a corporation, you have limited liability. The owner and the company are separate and distinct. The name of the Company is also protected.
When you are seeking to incorporate a company, it is best to consult with a lawyer to review all the circumstance regarding shareholders, reporting and maintaining proper records. Incorporating a company is the most expensive venture to start out of the three options.
