The three basic legal names for a business are corporation, partnership and sole proprietorship. Each category has several variations, and which one is best to use for a business enterprise depends on factors that include tax implications, the number of owners, liability and set-up costs.
A corporation is a legal entity that is owned by shareholders and managed and operated by a board of directors and officers. It is the only business enterprise that requires filing legal documents to exist.
A partnership is a business entity that has two or more owners. Profits and losses go to the individual owners, and the owners are subject to individual income taxes.
A sole proprietorship is a business entity that involves one owner. The owner is in total control of the business and is responsible for all debts and liabilities.