A Sole Proprietorship is a one-person business that is not registered with the state as a corporation or a limited liability company. Sole proprietorships are so easy to set up and maintain that you may already own one without knowing it. For instance, if you are an independent contractor who isn't on an employer's regular payroll, you are automatically a sole proprietor. However, even though a sole proprietorship is the simplest of business structures, you may have to comply with local registration, business license, or permit laws to make your business legitimate. The advantage of a sole proprietorship is that all profits are taxed as personal income. The main disadvantage is that you are personally responsible for paying both income taxes and business debts.

A General Partnership is the simplest and least expensive co-owned business structure to create and maintain. In a General Partnership, each partner has a hand in operating the business and all partners are personally liable for taxes and business debts. All profits from the business are filed on each partners' personal income tax statement. As with a sole proprietorship, you must still comply with local registration, business license and permit laws.

In a Limited Partnership, there are two different kinds of partners, general and limited. The general partner, who runs the business, has the personal liability for all debts, while the limited partners, who are basically passive investors, can lose no more than their stake in the partnership. All profits from the business are filed on each partners' personal income tax statement. As with a sole proprietorship, you must still comply with local registration, business license and permit laws.

A Limited Liability Company, commonly called an "LLC" is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Like owners of partnerships or sole proprietorships, LLC owners report business profits or losses on their personal income tax returns; the LLC itself is not a separate taxable entity. Like owners of a corporation, however, all LLC owners are protected from personal liability for business debts and claims - a feature known as "limited liability." This means that if the business owes money or faces a lawsuit; only the assets of the business itself are at risk. Creditors usually can't reach the personal assets of the LLC owners, such as a home. Like corporations, a LLC must be registered with the Secretary of State of Georgia.

Corporations consist of shareholders, a board of directors and officers. The shareholders own the corporation. The board of directors vote to make corporate changes, and officers run the corporation. Forming a corporation requires more work and organization but limits the personal liability of the owners. The main disadvantage of a corporation is double taxation, as the corporation must pay taxes on its income and the shareholders must pay taxes on dividends paid to them by the corporation.