It is necessary to decide what form of organization you will use before opening the business.
Most small businesses operate as a sole proprietorship .
This is the simplest form of organization with the greatest freedom from regulation and paper work. Its chief disadvantages are unlimited personal liability for debts of the business and the fact that the business terminates with death of owner. Death of a partner terminates the business and any one of the partners can commit the firm to obligations, which the other partner may have to pay out of his own pocket. Its continuity is unaffected by death or transfer of shares by any of the owners. Also, ownership may be widely distributed to many stockholders, thus increasing the possibility of raising capital.