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Different Types of Business Entity

 

A business entity is the vehicle a person or group of people use to carry on a trade or activity.

There are four main types:

Each of these business entities has its own particular benefits and its own set of drawbacks, such as limited liability, ease of setup and the level of bureaucracy, which is required to run them.

The decision of which trading structure to adopt might be the result of weighing up the pros and cons of each choice and then seeing which of them fits best with the objectives, style and aspirations of the business under consideration.

The kind of business entity chosen at the start-up stage does not prohibit the creation of a similar enterprise at a later date and allow both to run simultaneously under common ownership. It might also be possible and advantageous to transfer the trade of one type of business under one structure to another.

In choosing a type of entity, persons might wish to consider the norm, which may exist within a particular industry or business. For example, Solicitors practices are usually partnerships; larger businesses are generally companies and so on.

 
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