The owner receives all the business profits and must bear all the losses. The sole proprietor is personally liable , or responsible, for any lawsuits that arise from accidents, faulty merchandise, unpaid bills, or other business problems. This means the winner of a lawsuit against a sole proprietor can not only collect money from the business but also ask a court to force the owner to sell personal property. On the other hand, a sole proprietorship is the simplest business entity and has the least administrative burden, such as a filing with the state and separate tax returns. Partnership A general partnership consists of two or more owners who make decisions for the business together and share profits, losses, and liability.
Partners can bring different strengths, skills, and resources to the business.
Sometimes, partnership disagreements can destroy a business. A variation of the general partnership is the limited partnership. A corporation is a legal body composed of stockholders united under a common name. A corporation may issue stock to raise money. Essentially, the company sells pieces of itself to stockholders, who then become owners of the company.