The primary differences between a sole proprietorship and a Corporation is liability protection for the business owners and taxation. Operating a business as a sole proprietor means that the owner is personally liable for any debts, judgements, or damages awarded as a result of litigation. Operating as a Corporation, however, owner’s personal assets and finances are not vulnerable to liability that may be incurred during the course of doing business. Generally, the owners are not responsible for liability, rather the Corporation itself is responsible for debts and liabilities.

The LLC is not actually a corporation, but is rather a business organization that can be comprised of one or more owners. With the LLC (Limited Liability Company) owners are called "Members" and can own a specified percentage (%) of the business rather than holding shares in a corporation. LLCs do offer more flexibility in the way they are managed and usually have fewer recordkeeping and reporting obligations than corporations. Generally, the total LLC's business income is subject to self-employment tax while the S-Corporation is able to avoid self-employment tax by having the owners of the company becomes W-2 company employees.

S-Corporation status is a good option for many small businesses. For qualified owners of a domestic small business, the S-Corporation status provides liability protection to each owner similar to the C-Corporation. However, with the S-Corporation owners can also take advantage of "pass-through taxation". Because the S-Corporation is considered a "pass-through entity" by the IRS, the business itself isn't taxed at the corporate level.

Yes, there is a misconception that a Corporation cannot be owned by simply one person. This misconception originated from the requirement of many state agencies to list such officers as: President, Secretary, Vice-President, & Treasurer. However all of those positions can be assigned to a single owner.