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thousands of partnerships that ended in acrimony and confusion would suggest that it's a good idea. Alas, also like marriages, more than half of all business partnerships end in "divorce." A partnership agreement will spell out such things as each partner's initial capital investment in the business, how profits will be shared, how disputes will be resolved, and what will happen if the partnership is dissolved. The agreement should either be composed with the help of an attorney, or, if you choose to write the agreement up yourself, should be reviewed by an attorney. Partnerships file income and expenses for each calendar year on tax Form 1065. The business itself pays no taxes. Each partner reports his or her own income on a standard income tax form (Form 1040). Advantages • Easy to start. • plits the cost of starting S the business between two or more people. • rovides a broader base of skills P and interests—partners can compensate for each other's business weaknesses (unless you're exactly the same, in which case your deficits will be magnified). Disadvantages • ou must share decisionY making with your partners. • f one partner dies, the other is I liable for all of the business's debts. • s with sole proprietorship, A partners are personally liable for business-related mishaps. Unlike a sole proprietorship, this means you can be held personally liable in suits against your partner. You will need: • A business license. • A partnership agreement. Corporations A corporation is created through the filing of articles of incorporation in the state where you will practice (usually with the secretary of state, though some states differ). Many businesses file papers in a state with fewer requirements. If you decide to do this, you will still have to file a qualification in the state where you operate. Following the filing, stock is issued to shareholders in exchange for cash or other assets provided to the business. Once a year, the shareholders must elect a board of directors to oversee the business. In most states, a corporation must also file an annual report with the state. A corporation is composed of shareholders who own the stock in the company, a board of directors who oversee the company, and officers who run the company. Even if you are forming a corporation by yourself, you will need to issue stock to yourself, elect yourself to the board of directors, and appoint yourself president of the company. Advantages • ou are only liable up to the Y amount of stock you hold in the company. Your personal assets can't be attached in a lawsuit against the business. A partnership agreement will spell out such things as each partner's initial capital investment in the business. • he practice can continue in the T event an owner leaves or dies. • ecause of its limited liability B and accounting requirements, the corporate structure is attractive to a broader range of financial resources, including "angel investors," or individuals who back emerging entrepreneurial ventures. Disadvantages • corporation is the most legally A complicated business structure, and creating a corporate entity requires the assistance of an attorney. • corporation pays taxes separately A from its officers and employees (Form 1120). Depending on the type of corporation you choose, you may be taxed twice on profits and wages. You will need: • A business license. • ederal and state employee F ID numbers. Your accountant can help you determine the best option for you and can help you file the necessary paperwork. SPH