Here are some of the basic advantages and disadvantages of these types of business. If you are starting a small start-up company, sole proprietorship or partnership is the way to go. But as your business grows, forming a corporation might be more advantages. here we can take a look at all the pros and cons. SOLE PROPRIETORSHIP Advantages * You're the boss. * It's easy to get started. * You keep all profits. * Income from business is taxed as personal income. * You can discontinue your business at will. Disadvantages * You assume unlimited liabilit( it means you can lose everything including your house and yourproperties.) * The amount of investment capital you can raise is limited. * You need to be a generalist. Retaining high-caliber employees is difficult. * The life of the business is dependent on the owner's. PARTNERSHIP Advantages * Two heads are better than one. * It's easy to get started. * More investment capital is available. * Partners pay only personal income tax. * High-caliber employees can be made partners. Disadvantages * Partners have unlimited liability. * Partners must share all profits. * The partners may disagree. * The life of the business is limited. CORPORATION Advantages * Stockholders have limited liability. * Corporations can raise the most investment capital. * Corporations have unlimited life. * Ownership is easily transferable. * Corporations utilize specialists. Disadvantages * Corporations are taxed twice. * Corporations must pay capital stock tax. * Starting a corporation is expensive. * Corporations are closely regulated by government agencies. but wait there is a way to escape getting taxed twice. If you are interested in forming a corporation, but hesitate to do so because of the double taxation, there is a way to avoid it. You can do this by making your business an S corporation. The Internal Revenue Service permits this type of corporation to be taxed as a partnership rather than a corporation. However, in order to qualify for S status, your business must meet the specific requirements set forth by the IRS. These include limits on (1) the number and type of shareholders in the business, (2) the stock that is issued, (3) the corporation's sources of revenues. Source: http://www.powerhomebiz.com/vol3/legalstructure.htm#Sole%20Proprietorship