The two most common types of corporations created are S-Corporations and C-Corporations (C-Corp).

The main difference between an S-Corp and C-Corp is the taxation of the company’s net income. Shareholders own a C-Corp and are taxed as separate entities.

A C-Corp pays a flat tax rate of 21%. An S-Corp typically pays tax based on the individual tax rate of the shareholder. Tax rates for an S-Corp do have limits, so please consult with your tax advisor. Also, with an S-Corp, there can only be one class of stock. In an S-Corp, all shareholders must be treated the same.

Both corporation types provide limited liability protection to owners. This protection means owners generally are not responsible for the Corporation's debts and liabilities. If you work in the Corporation, the shareholder must pay themselves as W-2 employees for wages earned. This is the case no matter the Corporation type.

There are two types of partnerships: a general partnership and a limited partnership.

In a general partnership, all partners contribute to the business's daily management. Partners have the authority to make decisions and enter into business contracts. Responsibilities, liabilities, and contributions are generally equal between partners unless stated otherwise.

In a limited partnership, one or more of the partners are not involved in daily management. These individuals are limited partners. A limited partner is generally not liable for the business's debts, unlike that of a general partner. type.

There are two types of LLCs: Single-Member LLC and Multi-Member LLC.

A single-member LLC is a limited liability company with a single owner. For tax purposes, the IRS considers a single-member LLC as a disregarded entity. In a disregarded entity, the IRS ignores it for tax purposes. The IRS collects the business’s taxes through the owner’s tax return.

A multi-member LLC is a Limited Liability Company with more than one owner. It is a separate legal entity from its owners but not a separate tax entity.