One of the most significant decisions a prospective business owner makes is whether to launch a business as a sole proprietor or whether to take on one or more partners. There is no best choice that works in all situations. The choice normally boils down to whether the idea for the business was conceived with others and whether the people involved are equally committed to starting a business.

While most businesses are started as sole proprietorships, a growing number of businesses are started by a team of two or more people.^[1] Businesses that fit this criterion must organize as a partnership, corporation, or limited liability company. It’s normally not a good idea to organize as a general partnership, because the individual partners are liable for all the partnership’s obligations. This complication can be overcome by organizing as a corporation or a limited liability company, as described in Truth 19, “Choosing a form of business ownership.” It’s best to have an attorney involved to help you navigate the legalese of starting a business with two or more people, to make sure you select a form of business ownership that meets your collective goals.