Question

Determine the type of business entity from the following independent characteristics.

1) Sole proprietorship
2) Corporation
3) Partnership
4) Limited liability company

Answer 1

The options include sole proprietorship, corporation, partnership, and limited liability company (LLC). Each has its own features and advantages.

Step-by-step explanation:

The type of business entity can be determined based on the following characteristics:

1. A sole proprietorship is a business owned and run by one person. It is the most common and easiest form of business to establish. The owner assumes all the risk and keeps all the profits.
2. A corporation is a large and formal business structure. It is a separate legal entity from its owners and can sell shares of the company to raise funds. The owners are not personally liable for the company's debts.
3. A partnership is a business owned and operated by two or more people. The partners share the profits, losses, and liabilities of the business.
4. A limited liability company (LLC) is a newer business structure that combines the limited liability features of a corporation with the tax advantages of a partnership or sole proprietorship.

Based on the characteristics described, the type of business entity can be determined. For example, if the business is owned by one person and they want to assume all the risk and keep all the profits, it would be a sole proprietorship. If the business is a formal entity with separate shareholders and limited liability, it would be a corporation. If the business is owned by two or more people and they want to share the profits, losses, and liabilities, it would be a partnership. And if the business wants the benefits of limited liability and tax advantages, it would be a limited liability company (LLC).