When starting your own business, there are many different things you need to do before opening the doors to business. From the idea itself, you then need to choose a location, finance the business, and figure out what type of business structure your business is. Depending on the type of business structure you are in, you have a specific income tax form where you need to file. The five most common types of business structures according to the IRS are: sole proprietorship, partnership, corporation, S Corporation and limited liability company. Each structure has advantages and disadvantages, which is why as a business owner you should understand which type of structure is right for you. When a business is structured as a sole proprietorship, there is most likely only one owner. Sole proprietorships are the most common and simplest types of formation since they are not incorporated into corporations. Since a sole proprietorship is not a true legal entity, legally you are held responsible for anything the company does. If an accident occurs or your business is unprofitable, your personal assets are in danger. Therefore, everything you own can be taken away from you if you cannot pay. When a person dies or stops doing business, the business can easily no longer exist. The management and operation of the company are entrusted to a single person, the owner. When dealing with taxes for a sole proprietorship, the income or loss is transferred to the owner's personal tax return (1040) as regular taxable income. Therefore there is no special type of form that must be submitted to operate. If the company suffers a loss, the owner can deduct a portion of the losses from his taxable income. Trying to raise capital is difficult for… half of paper… tax identification number? Are you comfortable putting your personal assets on the line for your business? How much control do you or your partners want to have? Will the company be owned by other investors without a single owner? Works CitedBizfilings. “A Guide to Creating Your Own Business.” A guide to creating your own business. Bizfillings, 25 July 2011. Web. 1 December 2013. Revenue Agency. "Corporate Structures". Company structures. IRS, Nov. 14, 2013. Web. Dec. 1, 2013. Lamar, Barbara. “Business Entity Comparison.” Comparison between business entities. Lamar & Associates PLLC, April 29, 2013. Web. December 1, 2013. Volusion. “Starting a business.” Starting a Business Types of Business. OnlineBusiness, April 3, 2012. Web. December 1, 2013. Small Business Association. “Choose your business structure.” Company structures. Small Business Association, March 12, 2012. Web. December 1. 2013.