When forming a business, you have several entity options to choose from:
Sole Proprietorship: This is the simplest way to operate a business. You will need an EA number from the federal government, and it is recommended that you carry heavy insurance due to the lack of liability protection. This option is suitable if there are no partners involved.
Partnership: If your business has more than one partner, you can consider forming a partnership. However, be aware that partnerships do not provide liability protection either.
Limited Partnerships: These include family-limited partnerships and business-focused limited partnerships. Although not as common today, limited partnerships offer varying levels of liability protection.