You should see a lawyer or an accountant when you do this. Like a DBA, a partnership provides no protection of your personal assets. Corporations come with a cost in fees and paperwork, but they provide a shield between personal and business interests, and some tax breaks. Liability Liability is a touchy subject. Many software development shops put a standard disclaimer on all software to prevent liability.
Manufacturer disclaims all responsibility for losses.
The standard disclaimer has never been tested in trial, so, ethical considerations aside, don't rely on it too much. This disclaimer would work only for mass-marketed software, anyway. Custom software is normally developed under contract, and the customer won't pay if the product fails to meet his or her needs. Testers should never accept responsibility for the final quality of someone else's product. Though you might be tempted to look into liability insurance, my limited research suggests that only Lloyd's of London will touch this.