If your business is a sole proprietorship, you own and run it yourself. A sole proprietorship generally means you have unlimited liability, which means you would have to use your personal assets to settle a business debt. As a sole proprietor, you must also include your business income and expenses on your personal tax returns.

If your business is set up as a partnership, you and one or more other people own and run the company together, contributing your time, skills, money, and whatever else you each bring to the table as partners. In exchange, you and your partners share the business’s profits and losses. Some partnerships are set up with both general and limited partners. Limited partners invest in the business but aren’t actively involved in its management or responsible for its debts.

If your business is incorporated, or set up as a corporation, it has several distinct characteristics. It has limited liability, which means you won’t have to use your personal assets to settle business debts. It may have shares of stock, allowing easy transfer of ownership among you and other people. And this kind of company generally has company officers, who manage the business’s daily affairs, and possibly a board of directors, which oversees the company officers.

There are several ways to incorporate, which you’ll want to discuss with the lawyer who draws up your articles of incorporation. The type of corporation you use affects how your corporate profits are taxed.