Many small business are private corporations, especially those with a few employees, sole proprietorship is quite common for small operations and trades. A private corporation limits liability and offers more financial flexibility, your corp can invest your profits back into the business or even stocks and show no profit and your income tax is what you choose for a salary. There are other perks as well, if you make 200K in profit as a proprietorship you pay $200K worth of tax, if you make it as a corp, you can pay yourself $100k and pay the tax on that, but if you reinvest the other 100K you get a break. It's generally only worth incorporating if you make above a certain amount a year.