1. Sole Proprietorships
A sole proprietor has unlimited liability for the debts of the business. The sole proprietorship is taxed at the owner's individual tax rate. Since a sole proprietorship has one and only one owner, the management style is self-directed. In other words, the sole proprietor reports only to themself.
Note: Depending on how it's set-up a limited liability company can be a sole proprietorship, flow-though or corporation.
2. Corporations
Many businesses incorporate because corporations do have limited liability. With few exceptions, the shareholders and officers of a corporation are not liable for any corporate debts.
Any net income is taxed at the corporate tax rate. The management style is centralized. Shareholders vote in the board of directors who select the managers to run the company.
3. Flow Through Entities
There are a few different types of flow through entities. You're probably most familiar with the partnership, S-Corporaton or limited liability company.
Liability, taxation and management style will vary based upon type of flow through entity.
