There are many differences between these three types of entities. Unfortunately, there is not enough space to go through the intricacies here, but I can give you a brief overview.
Sole Proprietorships: Basically, a sole proprietorship is not a legal entity, and refers to a business which is solely owned by one person. This one person is personally liable for the debts and expenses of this type of business. This is the simplest form for a company to use. They are advantageous to owners because they are simple to form, and have nominal costs compared to other types of ownership. However, sole proprietorships are problematic because the owner’s personal assets can be reached by creditors for business matters.
Partnerships: This is a business owned by two or more people, who share equally in profits and losses. Partnerships involve a number of different legal considerations that you should familiarize yourself with. Also, there are different types of partnerships (such as general partnerships, limited partnerships, joint ventures), so you need to have a good understanding of what will work best for your company.
Corporations: These are separate legal entities that are owned by the shareholders. Corporations are much more complex and are typically used by larger businesses. They have more costly administrative fees and more complicated tax and legal requirements. Corporations are afforded the opportunity to sell ownership shares through stock offerings. There are also different classifications of Corporations (such as C-Corps, S-Corps, Closely Held Corps.), so once again, you will need to have a good idea of what your company’s best option is.
If you are considering creating a legal entity for your business, your best bet is to contact a lawyer. A lawyer will at least be able to steer you in the right direction and help you avoid complications in the future. You should take a look at our website – LawTrades . You can find quality lawyers in your area for the price you’re looking to pay. Also, you can contact our attorneys 24/7 so you can get your legal advice in an efficient and convenient way.
Ultimately, you will need to identify the goals of your business and how you would like it to be formed. Understanding the composition and operational technicalities you want your business to have will allow you to choose the best option.
I hope this answer is helpful! If there is anything I can do personally to help you out, please don’t hesitate to reach out.