A sole trader is someone carrying on business personally, and is liable for all his business debts. A partnership is more than one person carrying on business together, who are jointly responsible for its liabilities. The company is often the preferred choice. It offers a clearer management structure through directors who are appointed by shareholders. It allows shareholders to dispose of their shares more freely, although the market for private company shares will usually be limited.
Any business needs a management structure.
It is important to balance effective and decisive management with safeguarding the interests of investors and shareholders. It is a common mistake to underestimate the start-up capital required, and the working capital needed while waiting for cash to come in. Cashflow forecasts should form part of any business plan. Your trading with both customers and suppliers will involve you in contracts even if your dealings are purely verbal. It is important to have standard trading terms which are usually printed on your stationery.