A new form of business ownership (not a corporation) approved in most states since approximately 1994- combines aspects of partnerships with the limited liability of a corporation; owners know as members:

If you’re starting a new business, you have to decide which legal form of ownership is best for you and your business. Do you want to own the business yourself and operate as a sole proprietorship? Or, do you want to share ownership, operating as a partnership or a corporation? Before we discuss the pros and cons of these three types of ownership, let’s address some of the questions that you’d probably ask yourself in choosing the appropriate legal form for your business.

In setting up your business, do you want to minimize the costs of getting started? Do you hope to avoid complex government regulations and reporting requirements?

How much control would you like? How much responsibility for running the business are you willing to share? What about sharing the profits?

Do you want to avoid special taxes?

Do you have all the skills needed to run the business?

Are you likely to get along with your co-owners over an extended period of time?

Is it important to you that the business survive you?

What are your financing needs and how do you plan to finance your company?

How much personal exposure to liability are you willing to accept? Do you feel uneasy about accepting personal liability for the actions of fellow owners?

No single form of ownership will give you everything you desire. You’ll have to make some trade-offs. Because each option has both advantages and disadvantages, your job is to decide which one offers the features that are most important to you. In the following sections we’ll compare three ownership options (sole proprietorship, partnership, corporation) on these eight dimensions.