Most attorneys, myself included, take for granted how little most individuals know about corporation law and business entities. The distinctions between the different types of entities that can be created are substantial and have a tremendous legal effect on how the business operates from year to year. There are four basic categories of business that can be formed by an individual or groups of individuals: 1) sole proprietor, 2) partnership, 3) limited liability company (aka LLC) and 4) corporation (aka Inc.). For more on how partnerships function in California click here.