Type of Business Entity

 Type of Business Entity

There are three main types of business entity.

• Sole traders
• Partnerships
• Limited liability companies

Proprietorship

•Owned by one person
•Owner is often manager/operator
•Owner receives any profits, suffers any losses, and is personally liable for all debts

Partnership

•Owned by two or more persons
•Often retail and service-type businesses
•Generally unlimited personal liability
•Partnership agreement

Limited Liability Companies

•Ownership divided into transferable shares of stock
•Separate legal entity organized under state corporation law
•Limited liability