A general partnership is fairly easy to establish. And the general partnership agreement should include the following: a list of the rights and responsibilities of each partner and their heirs; the management and continuity arrangements for the business in the event of the death or disability of one of the partners; the profit and loss distribution plan; and any special conditions or arrangements that may affect any of the partners through operation of the business.

• All profits taxed as personal income
• Lack of continuity when one partner dies or is disabled
• Sharing of profits
• Difficult to raise additional capital
• Unlimited liability for partnership obligations
• Divided authority (limited decision making)
• Hard to find suitable partners

• Additional personal resources (financial and managerial)
• Low start-up (organizational) costs
• Limited outside regulation
• No double taxation
• Simple organization

A limited partnership permits investor involvement with liability limited to the amount of the investment or the amount agreed to in the limited partnership agreement. The limited partnership must include at least one general partner who has general liability for the debts of the limited partnership. And the limited partner usually exercises no control over the business of the partnership but is merely an investor.

• The general partner has unlimited personal liability for the obligations of the business.
• This structure is complex to organize.
• The limited partner has no control over the business.
• There is a lack of continuity in the event of the death or disability of the general partner.

Advantages

• The limited partner can invest with a limit on personal liability.
• It is an easy way to secure capital.
• The general partner maintains control of the business.
• The business is not taxed directly.

A corporation attracts capital investment funds by selling shares of stock in the company to investors or by trading stocks for assets. Generally, stockholders are not liable for claims in excess of the current value of their shares. Corporate officers may be required personally to guarantee bank notes or loans; they are then personally liable for the obligation. Other creditors generally can lay claim only to the assets of the corporation.

• Double taxation
• The owners expect operating losses.
• Most expensive to organize
• Complex organization and management
• Extensive record keeping necessary
• Closely regulated
• One corporate may consider is the "S" corporation (Subchapter S Corporation).
• Large dividends are anticipated.
• The owner's individual tax rates are lower than the corporate tax rates.
• There are 75 or fewer stockholders.
• The corporation has only one class of stocks.

• Transferable ownership
• Separate legal entity
• Specialized management
• Limited personal liability
• Easier to raise capital
• Perpetual life