Owned by two or more people who share liability. Partners can be general, which means they have unlimited liability, or limited, making them liable only to the extent of their investment in the business. General partners have management rights, while limited partners are prohibited from managing. Profits can be divided in any fashion agreed to by the partners, and they're taxed as individual income. Owned by shareholders who are liable only to the extent of their investment.
Management is three-tiered, with shareholders choosing directors, who in turn choose executives.
In small companies, one person often has more than one role. Profits are usually double-taxed, which means the corporation is taxed for its earnings, while any profits paid to shareholders are taxed as individual income. Business must be conducted in compliance with federal, state and local corporation laws. Owners are liable only to the extent of their investment, but unlike limited partners, they can play an active role in management. Like corporations, LLCs require some compliance with government regulations, but the paperwork is considerably less.