The way a business chooses to organize their business is important when deciding how the business will run and also when considering tax benefits and liabilities. Three types of business organization that will be discussed here are a partnership, a corporation, and a proprietorship. A sole proprietorship is a sensible organization for a self-starting individual who does not want to operate their business with partners. Although choosing this way of organization risks the chance of appearing unprofessional, this form of operating allows the proprietor to work out of their home if so desired. This structure also eliminates the amount of taxes paid as well as the number of forms needed to be filled out at tax time. Downfalls of operating under a sole proprietorship are that the proprietor assumes complete responsibility for any debt or liability the business incurs, which could mean they may be held financially responsible for any problems or adverse consequences resulting from operating their business. Additionally, if the owner of a proprietorship is to fall ill, the incapacitation of them could result in the loss of the business. The saying “safety in numbers” comes to mind when speaking of the benefits of a partnership. In a partnership there is someone else with whom to share the workload; that person is not just another employee, they have a genuine interest in the company itself. One must be sure their partner shares the vision and goals for the business. A partner can contribute capital as well as share the risk that comes with operating a business which can cause conflict due to one partner having contributed more time or money and ill feeling being developed. The IRS says that businesses operating under a partnership, “must file an annual information ...