1. Sole Proprietorship

  • What it is: A business owned by one person.

  • Easy to start? Yes, very easy — usually just register a name or get a license.

  • Who’s the boss? You are.

  • Money rules: You keep all the profits.

  • Risk: If the business owes money or gets sued, you are personally responsible. That means your own savings, car, or house could be at risk.

2. Partnership

  • What it is: A business owned by two or more people.

  • Easy to start? Pretty simple — you just need an agreement between the partners.

  • Who’s the boss? Shared between partners (unless you agree otherwise).

  • Money rules: Partners split profits and losses.

  • Risk: Each partner can be held responsible for the whole business’s debts, not just their own share.

3. LLC (Limited Liability Company)

  • What it is: A mix between a partnership and a corporation.

  • Easy to start? Harder than a sole proprietorship, but easier than a corporation.

  • Who’s the boss? Owners (called “members”) run it, or they can hire managers.

  • Money rules: Profits can go straight to the owners, and they pay taxes on their personal income (no “double taxation”).

  • Risk: Owners are usually protected — their personal stuff (house, car, savings) is safe if the business gets sued or owes money.

4. Corporation

  • What it is: A business that is a separate “legal person” from the owners.

  • Easy to start? Most complex and expensive to set up, with lots of rules.

  • Who’s the boss? Shareholders own it, a board of directors makes big decisions, and managers run day-to-day work.

  • Money rules: The corporation pays taxes on its profits, and then owners (shareholders) pay taxes again if they get dividends — this is called “double taxation.”

  • Risk: Owners (shareholders) are protected; they can only lose what they invested, not their personal belongings.

In short:

  • Sole Proprietorship = You run it alone, but you take all the risk.

  • Partnership = You share ownership, profits, and risks with others.

  • LLC = Flexible and protective, like a shield for your personal assets.

  • Corporation = A separate “business person” with strong protection, but more rules and taxes.

Feature Sole Proprietorship Partnership LLC (Limited Liability Company) Corporation
Owners 1 person 2 or more people 1 or more “members” Shareholders (can be many)
Setup Easiest, low cost Easy, need agreement Moderate, some paperwork Most complex, expensive
Control You make all decisions Shared by partners Flexible: members or managers Board of directors & managers
Profits All yours Split among partners Go to members Belong to corporation; dividends to shareholders
Taxes On your personal income On partners’ personal income On members’ personal income Double tax: corporation + shareholders
Risk Personal assets at risk Partners’ personal assets at risk Personal assets usually protected Personal assets protected
Best for Small, simple businesses Small groups with trust People wanting protection but flexibility Large or fast-growing companies