In general, a corporation is a business entity that is given many of the same legal rights as an actual person. A corporation may be a single person or a group of people, known as sole corporations or aggregate corporations. Corporations exist as virtual or fictitious persons, granting some protection to the actual people involved in the business. The limitation of liability is one of the many advantages to incorporation, and is a draw for smaller business to incorporate.

A corporation may issue stock, either private or public, or may be classified as a non stock corporation. If stock is issued, then the corporation will usually be governed by its shareholders, either directly or indirectly. The most common model is a board of directors which makes major decisions, serving the best interests of the shareholders. In the United States, there are three major types of corporations, Close, C, and S.

Close corporations issue stock, but the amount of shareholders is limited, usually to less than thirty. Normally all shareholders are involved in decision making, and the transfer and sale of stock is tightly controlled.

C Corporations are the most common type in the United States. They allow for theoretically unlimited amounts of stock to be issued, and usually have a smaller board of directors that make decisions. C Corporations pay taxes at the corporate and personal levels.

S Corporations are nearly identical to C corporations, except that they have special tax status with the IRS. S Corporations are only required to tax their dividends, the corporation itself does not need to pay taxes.