You can operate in any of these forms. A corporation can be a C corporation or an S corporation. An S corporation is like a sole proprietorship in that the income of the corporation is treated as that of its shareholders. A C corporation is a corporation that is taxed as a separate person under corporation tax rates. Depending on the amount of income, the corporate tax rates are generally higher than for individuals. Both forms of corporations provide limited liability, that means, unless you agree to personally guaranty something, the corporation alone is responsible for its debts not you individually. An LLC is a limited liability company and has the same lilmited liability as a corporation but is treated for tax purposes like a partnership. In some states, a limited liability company can have a single member and then it is treated like a sole proprietorship. A sole proprietorship is you operating individually in business. There is no limited liability like a corporation or limited liability company. Your taxes are reported on Schedule C on your personal tax return.
Most people prefer the benefits of limited liability. If you use a S corporation, you get the benefit of that and get taxed as though it was a sole proprietorship.
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