When establishing a new business, it can be structured in one of three different ways. Provided below are the different structures and some of the advantages and disadvantages of each:

• Sole Proprietorship
  Advantages
  • The easiest and least expensive to set up
  • Inexpensive to maintain
  • You own all profits and operate the business to your liking
  • Sole decision maker
  • Own boss
  • Easy to cease operations
  Disadvantages
  • Assume all the risk
  • Solely responsible for the payments of the debts
  
  
• Partnership
  Advantages
  • Easy setup
  • Extra partners add skills and experience
  • More support (financially and morally)
  • Easy to cease operations
  Disadvantages
  • Business could suffer due to disagreements or miscommunications
  • All partners are liable for business debts
  
  
• Incorporation
  Advantages
  • Owners are only liable for their investment
  • Money can be raised by the selling of shares
  Disadvantages
  • Set up can be complex along with the tax rules
  • More expensive to set up and maintain
  • More difficult to cease operations

• The right structure may help the reduction of costs
• Investors or additional partners may only be interested in certain type of structures
• Banks and other organizations may only be willing to finance certain types of structures
• Taxation differs depending on the structure
• Financial risk