Sole Proprietorship
Business owned by one person, called a “proprietor.”

Advantages

Disadvantages

- Simplest and least expensive to set up
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Minimal registration requirements
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Owner in direct control
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Possible tax benefits (losses can be applied against other income of proprietor)

- Owner assumes all risk of business; responsible for payment of all business debts. Creditors can seize your personal assets.
- Lack of continuity (ownership not transferable)
- Difficult to raise capital
- Possible tax disadvantages (profits must be added to personal income)

Partnership
Business owned by two or more individuals or corporations.

Advantages

Disadvantages

- Easy to set up and very flexible
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Limited regulation
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Partners provide sources of additional capital and skills

- Partners assume personal liability for debts of business
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If disagreements arise, business can suffer
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More complex record keeping and tax returns

Corporation
A separate legal entity which can enter into contracts and own property separately and distinctly from its owners who are the shareholders.

Advantages

Disadvantages

- Limited liability (generally limited to individual’s personal investment in the business)
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Continuous existence (ownership transferable)
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Easier to raise capital (i.e. money for the business can be raised by selling shares)
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Possible tax advantages

- More expensive and complicated to set up and maintain
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Extensive record keeping and complex taxation
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Closely regulated

For information on how to register a sole proprietorship or partnership, visit the Business Registration page.

For information on incorporation, visit the Incorporation page.

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