The corporation is the oldest form of limited liability business entity. A corporation tends to be a more rigid, structured form of business organization than a limited liability company or a limited partnership. In some cases, though, a corporation can gain some of the flexibility commonly found in limited liability companies or limited partnerships through use of a shareholder's agreement. This is usually only appropriate where there are a few shareholders.
The corporation may also elect in certain circumstances to be treated for tax purposes as a partnership which will allow the income and losses to pass through to the shareholders and will avoid the double taxation usually found in a corporation. Among other things a corporation that wishes to make an S election, must have 100 or fewer shareholders and meet a number of other requirements.
State and Federal tax consequences, including the possibility of double taxation through a corporation, should be discussed carefully with your certified public accountant or other qualified tax advisor.