Business entity

Business Entity

A Business Entity (/ˈbɪznɪs ˈɛntɪti/) is a legal structure that is set up by entrepreneurs to conduct business. This structure is separate from the individuals who own and operate it and it can enter into contracts, sue and be sued, own assets, and perform other functions.

Etymology

The term "Business Entity" is derived from the words "business" which means a person's regular occupation, profession, or trade, and "entity" which refers to a thing with distinct and independent existence.

Types of Business Entities

There are several types of business entities, each with its own legal and financial implications. Some of the most common types include:

• Sole Proprietorship: This is the simplest form of business entity. It is owned and run by one individual and there is no legal distinction between the owner and the business.

• Partnership: A partnership is a business owned by two or more people. There are several types of partnerships, including general partnerships, limited partnerships, and limited liability partnerships.

• Corporation: A corporation is a legal entity that is separate and distinct from its owners. Corporations can own property, enter into contracts, sue and be sued, and do many of the things that individuals can do.

• Limited Liability Company (LLC): An LLC is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.

Related Terms

• Business Structure: The legal structure of a business, which can include sole proprietorships, partnerships, corporations, and limited liability companies.

• Legal Entity: A legal entity is an individual, company, or organization that has legal rights and obligations.

• Entrepreneur: An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards.

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