Business entities come in a variety of shapes and sizes, but all of them share some common characteristics. All business entities have an owner who is responsible for directing the operations of the business. Business entities also have a set of assets, liabilities, and revenues that determine their financial standing.

There are three main types of business entities: sole proprietorships, partnerships, and corporations.

Sole proprietorships are the most common type of business entity in the United States. A sole proprietor is responsible for allocating all the profits and losses from the business between their personal income tax returns.

Partnerships are two or more individuals who agree to work together to operate a business. Each partner has an ownership stake in the partnership, but each partner is also responsible for managing his or her own portion of the partnership’s assets.

Corporations are businesses that are structured as legal entities with distinct rights, responsibilities, and ownership interests.