Business entity types and what is the right choice for you - For the most part, businesses fall under one of three categories: sole proprietorships, partnerships, and corporations. As you might suspect, each has strengths and weaknesses, meaning the choice of deciding which is best-suited to your vision is not going to be easy. That's good, though. If it were easy, what would be the challenge in building something successful?

Each year, thousands of Americans launch their own businesses.

Sole Proprietorships
Sole proprietorships, companies with a single owner, are the most common type of start up. This type enterprise is rooted in this country's beginnings, when ideals like self-reliance, rugged individualism, and hard work were the basis of commerce. To this day, sole proprietorships remain the most common type company in part because of their size. The initial investment is usually a modest one, and the business is based on the particular interests or experiences of the individual. In addition, there is the emotional satisfaction of "being your own boss". At the same time, all the major decisions fall on the shoulders of the single owner, who also assumes all of the risk should the business fail. Making such an enterprise succeed requires more than a willing spirit, it rests on the need for the product or service that's being offered. That, ultimately, will determine how long a company stays afloat, and if it will grow and become prosperous. AIT began as the idea of a single person who saw a need in the Internet industry for Web hosting. From there, several subsidiaries have been launched, but all roads lead back to hosting. No matter how advanced technology gets, people who operate online businesses will always need a host for their site.

Partnerships
When two or more people pool their financial and intellectual resources, they have formed a partnership. Frequently, these are professional agencies such as law or architectural firms, medical and dental practices, and accountants or advertisers. Obviously, you're not limited to these ventures, they just appear to be the most common examples. The tech world lends itself to the biggest advantage of partnerships in that there is more than one function to fill. There's an analogy used by business professors with a doughnut shop as the example: there has to be a person to make the doughnuts, and there has to be a person to sell them; everyone else is overhead. Partnerships allow for combining skills, with each participant focusing on his/her area of expertise. The obvious downside is the potential for conflict among the principals. Over time, people change and their goals or vision for the business can, too.

Corporations
The third alternative for forming a company is a corporation, whose employees can number into the thousands and whose ownership may include stockholders. This type enterprise is usually involved in the mass manufacture of a product like cars, beverages, and heavy equipment or it provides a large-scale service such as airline travel, gasoline refinement, or department store. There are several different types of corporations, to include both publicly and privately-owned entities, non-profit agencies (United Way, Cancer Society, some universities), and even individuals of extreme wealth who incorporate to escape high taxes. Perhaps the greatest advantage of a corporation is the limited liability afforded to officers; if the business fails, the penalty is spread among numerous people. When sole proprietorships or partnerships go under, the financial damage is far more concentrated. Another advantage is that the corporation outlives the founder. Ford Motor Company, the Wrigley's gum company, and Sears are just a few examples of how a business chugs on long after its originator has died. On the other side, there are heavy costs and potentially heavy taxes associated with incorporation. All pay a corporate tax and individual shareholders face taxes on dividends. In addition, the government can require disclosure of finances and even some operations. The latter can be a problem in keeping research projects hidden.