Sole Proprietorship - This is considered to be the simplest of businesses. A sole proprietorship is considered its own entity and its owner has complete management control. This means that the individual that carries ownership is fully liable for every obligation that pertains to this business. Along with being fully responsible he/she also gains all profits of said company. This type of company is considered to be a single entity for tax and liability purposes and is registered as that for liability purposes. The owner pays income tax on the business in conjunction with his/her taxes; therefore they are fully responsible for any business debts.
Partnership - A partnership is a contract consisting of two or more people. This contract and the people within the contract share the profits and losses. These individuals within said partnership are considered general partners; they manage the business on an equal basis and are also equally liable for the business.
There can be other individual mentioned within the contract that are considered limited partners, that invest in the business but are not equal when it comes to decisions and liability. The partnership nor the business itself pay income taxes the individual partners must report their gain and losses of their shares on their individual income taxes. There are certain tax forms and processes that must be made with in this type of business venture.
Limited partnership - A limited partnership is a partnership where there are one or more general partners who manage the business, and one or more limited partners who have invested in the business but have no liable connection to the business. They are just investors in the business and do not really have any say so in how the business is run or are held to the failure of the...