The best way to understand a corporation, limited liability company (or even a limited partnership) is to realize that each creates a special legal relationship or privilege between the business owner(s) and the government. These areas of government include: 1. State Government (including state taxing authorities and the state court system) 2. The Federal Government (specifically the IRS and the Bankruptcy court system) You may be saying, alright Darius, I still don't understand what you mean by a relationship or privilege. The best way that I can put it is this: A business entity is a legal relationship which allows for certain privileges. When teaching people about entities, I like refer to an often forgotten fact: In England during the colonial period the ability to create a corporation required an exclusive grant (i.e., permission) from the Crown (that's right the King or the Queen!). Remember a business entity is a privilege! HERE IS ANOTHER TIDBIT:

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