Corporation

 May have one or more owners. Formally created under state law. All of the owners have limited liability for the business's debts. Usually more costly than LLC to create and maintain. Subject to many formal statutory rules ("corporate formalities") regarding officers and directors, meeting and recordkeeping requirements. A regular corporation, termed a "C corporation," is a separate taxpaying entity, which may result in higher taxes and requires the filing of a separate tax return.

When the corporation elects to be treated as a "conduit" for tax purposes, so that its income and loss flow to the owners, it is termed a "subchapter S" corporation. Note that this is merely a federal income tax election made by filing a form with the IRS. The corporation is formed in the normal manner under state law, and the subchapter S election has no other effect on the character of the corporation, except for the different tax scheme.

In a small group of states, the corporation may be formed as a statutory close corporation, which operates more like a partnership or LLC. This option can offer significant advantages over a conventional corporation.

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