Sole Proprietorship – This is an easy one! This is a single person doing business as (DBA) a company. This is a very easy type of business to set up:
- Make sure you are not infringing on another company’s name.
- Go to the bank and open a “sole proprietor” checking account with you DBA company name.
- Start doing business!
- Like the name implies, you are the only member of this company so you cannot have employees. You must pay everyone as a subcontractor.
- This form of business puts all the tax burden and all the liability on the sole proprietor. There are no protections afforded by this type of company.
- This type of business can be beneficial to very small, one person organizations, but larger companies that you may want to partner with, may shy away from working with a sole proprietor because of liability and dependability issues associated with this type of entity.
General Partnership – The partnership is basically a group of sole proprietors. Same liability and tax issues as a sole proprietor, but no paperwork is required for registration in most states, making it very easy to set up.
These days the Limited Liability Company (LLC) seems to be the way to go, it has all the advantages of the corporation and none of the nonsense paperwork. Who wants to keep track of corporate minutes?