You’ve correctly identified the three primary forms of business in the U.S.:

1. Sole Proprietorship:

   • Defining Characteristics:
     • Owned and operated by a single individual.
     • Simplest and least regulated business structure.
     • Owner has complete control and receives all profits.
     • Owner is personally liable for all business debts and obligations.
     • Easy and inexpensive to set up.
     • Business and owner are considered the same legal entity.

2. Partnership:

   • Defining Characteristics:
     • Owned by two or more individuals.
     • Partners share profits and losses according to their agreement.
     • Can be a general partnership (all partners have equal liability) or a limited partnership (some partners have limited liability).
     • Partners are generally personally liable for business debts (in a general partnership).
     • Relatively easy to establish.
     • Partnership agreements are crucial to define roles and responsibilities.

3. Corporation:

   • Defining Characteristics:
     • A separate legal entity from its owners (shareholders).
     • Owned by shareholders who elect a board of directors to oversee management.
     • Shareholders have limited liability, meaning their personal assets are protected from business debts.
     • Subject to more regulations and formalities than sole proprietorships or partnerships.
     • Can raise capital by issuing stock.
     • Subject to “double taxation” (profits taxed at the corporate level and again when distributed to shareholders as dividends). ¹  
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     • There are also S corporations, which are a type of corporation that has pass through taxation, like a partnership.

Your descriptions of the core aspects of each business type are accurate.