Sole Proprietorship

The title speaks for itself. The individual operates alone and is personally liable for all debts and acts arising out of the operation of the business. This structure only makes sense for small, INDIVIDUAL, or temporary business ventures because their may be some tax benefits operating under this structure. Again, this business structure is not an option if there is more than one person running the business organization.

Partnerships

If you are going into a business venture with someone else, by the very nature of the business relationship, you have created a partnership. The two most common types of partnerships are general and limited partnerships. Each one of these partnerships has its own advantages and drawbacks. However, with the general partnership, each partner opens himself up to personal liability to the debts and acts of the partnership. This is probably the major drawback of a general partnership.

In contrast, in a limited partnership, the individuals that are limited partners are only liable up to the amount of their investment. Limited partners cannot have any actual or apparent control of the day to day operations of the partnership.

The bottom line is that, like a sole proprietorship, the partners generally are liable for the debts and personal acts of the partnership which can be a very unattractive option for some business people.