Business entity simply refers to the form of incorporation for a business. Limited liability companies and corporations are common types of legal entities. When a business incorporates, the law recognizes the business as a distinct legal entity which can enter contracts and acquire property among other rights and privileges. The definition of a sole proprietorship is essentially a business that is run by one person and owned by that person as well. Specifically, a sole proprietorship is separated from the other business entities because of the specific the legal dynamics between the business and the owner of the business. Moreover, because of this factor, sole proprietorships are usually easy to both form, maintain as well as dissolve if need be. It’s the easiest to set up because it doesn’t require the filing of any papers. States do not require the registration of proprietorships. Profits are only taxed once on the owner’s personal tax returns. The owner has complete control of the business and makes all the decisions. Tax forms are not complicated. Assets are easy to liquidate upon the death of owner.

Sruthy Santhosh

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