Corporations can be used by individuals, small groups of individuals and large groups of individuals to operate a business. The major advantage of a corporation is that the shareholders are not personally liable for the debts of the corporation.
Corporations can be classified as C corporations (i.e, large corporations like Bell South) or S corporations (i.e., small corporations such as a family business). The choice depends upon the number of shareholders are their desire to have the corporation to pay for fringe benefits. C Corporations file their own income tax return and may paid corporate taxes, while an S corporation does not file a return and the shareholders are taxed as if they were partners.